What is HR Compliance, and Why is it important for Businesses to become HR Compliant?
What is HR Compliance?
HR Compliance ensures that policies can be addressed directly in compliance with the labor laws of the organizations involved. In addition to policy setup, enforcing practices to follow these policies daily is also part of HR compliance.
Workplace policies and procedures must comply with the applicable laws and regulations within the operational jurisdiction of the subject enterprise, regardless of the size of the organization.
What does HR have to do with Compliance?
HR departments are in charge of ensuring that employees meet their legal obligations. National, state, and international requirements must all be met.
Human compliance encompasses all aspects of human resources, from recruitment to payroll. There are numerous ever-changing mandates that all employers and HR departments must follow. A few types of compliance are listed below, along with some explanation.
Compliance with federal, state, and local laws must be considered as part of the legal framework within which a company operates. Statutory compliance is a legal requirement, and employers who fail to comply may face criminal charges. Legislation concerning the minimum working age, anti-discrimination, and the minimum wage are examples of statutory compliance.
Regulatory compliance varies by country because it entails adhering to specific mandates established by a regulatory body.
If an organization fails to maintain compliance, it may face criminal charges, as it does with statutory compliance.
Contractual compliance entails both parties to the contract adhering to the terms they agreed to. This could apply to provisions such as employee benefits, severance pay, and notice periods. Although non-compliance does not result in criminal charges, an employer who violates the terms of the contract may face a civil claim.
Union law compliance
These labor relations laws protect employee rights and address issues that federal law does not address.
HR technology compliance
Technology platforms must comply with an increasing number of regulations, such as GDPR, which governs data privacy and requires that employee data be stored and managed in a compliant manner.
This refers to internal company policies that ensure statutory and regulatory laws are followed in practice. For example, a company in a country with a 35-hour work week may develop a policy requiring employees to leave the office by a certain time each day.
Some jobs require mandatory employee training such as in healthcare and manufacturing, the employers have to be compliant with the desired training requirements.
International labor law
The International Labor Organization (ILO) defines international labor law. The rules and regulations govern so many aspects of labor. The labor laws apply regardless of whether the county is a member of the ILO.
Country-specific HR compliance
Companies operating internationally must adhere to the in-country policies of a country. Having country-specific HR guidelines in place can help organizations stay compliant and avoid the risk of penalties.
This applies to internal HR policies that are proactively adhered to, ensuring these are typically related to statutory and regulatory rules. Workplace compliance can include policies such as working hours, breaks, non-discrimination, etc.
Key HR Compliance Issues
Human resource compliance is a highly regulated field that is becoming increasingly difficult to handle.
However, the cost of noncompliance makes managing this complexity necessary.
To remain compliant, firms must take a proactive approach in which they anticipate concerns and handle them straight on.
The following are some critical compliance problems that every HR department should be aware of:
Considering legal requirements
Statutory and regulatory standards are continually changing, making it difficult for any organisation to maintain current compliance in these areas.
This is especially true for larger firms that do business in many states or jurisdictions.
To alleviate this strain, it is recommended that HR compliance obligations be outsourced to a third-party service that can manage all relevant regulations.
Lack of clarity in technology.
Most large organisations require HR technology such as a Human Resource Information System (HRIS); however, many platforms do not make their compliance policies clear when it comes to matters such as security, privacy, and data collection, potentially causing them to fall foul of regulations such as GDPR.
To address this issue, businesses can emphasise compliance considerations when selecting a new provider by inquiring about their data compliance policy. HR technology should only be obtained from vendors who follow the law and update their software on a regular basis.
Bridging the gap
Regular training, education, and internal efforts to reinforce such laws are all steps in the right direction.
HR Compliance Training?
Human resource compliance training is the practice of teaching employees at all levels of a company about the laws and policies that govern their activities in the workplace. Organizations can avoid penalties for noncompliance with the law and successfully meet the requirements for passing an HR compliance audit by doing so.
Employee compliance training can help employees become more knowledgeable about workplace safety, culture, diversity and inclusion, etc.
Mastering the HR Compliance Audit
An organization can master an HR compliance audit by following these three best practices.
Implement local HR compliance
Every country or geographic area has its own legislative and regulatory compliance standards.
Every country or geographic area has its own legislative and regulatory compliance standards. This can also be local or state-specific, thus having a certification body in each jurisdiction can help make sure that all components of a business are according to the applicable legislation.
Update policies and handbooks
The compliance documentation should be kept up-to-date on a regular basis to remain compliant with the latest laws and regulations. All compliance materials should have been evaluated periodically to ensure it is kept up to date and represent any relevant changes or advancements. Staff training manuals must be regularly updated, and occupational procedures should be disseminated to all employees, contributing in the formation of a compliance environment within the institution.
Make use of HR tools
HR technology can be helpful in tracking the evolving rules. HR technology can be helpful in tracking the evolving rules. The right HR software can help businesses free up resources by navigating the complexity and ensuring all applicable requirements are properly met.The right HR software can help businesses free up resources by navigating the complexity and ensuring all applicable requirements are properly met.
HR compliance checklist
HR compliance checklists can help organizations stay compliant in various areas.
The following are areas to review in order to ensure HR compliance within an organization.
- Recruitment and Selection
- Recruitment processes
- Occupational Health and Safety
- Policies and procedures
- Employee handbook
- Workplace Ethic and Code of Conduct
- Working hours and compensation policies
- Conflict resolution
- Discipline and termination
You want to grow internationally? Our compliance services team can help you recruit and hire employees internationally and ensure you build a compliant local presence without the need to establish a local entity. In a new market, you should focus on growing your business. Contact us to find out more.