An introduction to HR compliance
HR teams are responsible for HR compliance. In their role, they take a proactive approach to ensure that the organisation respects the laws and regulations in place. From statutory rights to health and safety, human resources teams should make HR compliance their priority. In this section, we clearly define what HR compliance is and we dig deeper into the key elements of HR compliance and its importance for your business.
What is HR compliance?
To put it simply, HR compliance is ensuring that an organisation is following all the rules and standards that are set by the UK employment laws. It includes workplace policies and procedures and aims to ensure that work practices follow the law. It is essential that organisations follow employment regulations to ensure the safety, security and health of their employees. Non-compliance results in fines and penalties that can have dramatic consequences. Defining the policies and procedures around HR compliance for the organisation is a critical role of human resources departments.
The key elements of HR compliance
HR compliance can be complex due to the laws and regulations that are updated on a regular basis. As such, there is a risk of fines, so many businesses intensify their investment in HR compliance to ensure that they comply with the law. Below are some key elements to keep in mind.
- Employment laws should be followed at all times.
- Local regulations, if any, should also be applied.
- Audits may occur and will result in penalties if the business is not compliant.
- It is the organisation’s responsibility to be aware of the laws and regulations in place.
- Penalties might have a significant cost to businesses and may lead to bankruptcy.
The importance of HR compliance
As seen in the section above, one of the main reasons for HR compliance is to avoid heavy penalties that may jeopardise the business. However, there is much more to HR compliance. Compliance is in place to protect both employees and the business. Applied well, it has an impact on the reputation of your organisation and develops trust with customers. It also impacts employee experience and as such increases retention rates.
The ultimate guide to HR compliance
As HR compliance relates to laws and regulations, HR managers who are responsible for it spend time ensuring good practice. The section below provides some best practices when it comes to HR compliance. It also gives you a checklist that can help create the framework of HR compliance and some concrete examples that may help you grasp HR compliance.
HR compliance best practices
There are some best practices when it comes to HR compliance. These help to ensure that it is handled well by the business.
Map the employee life cycle
Documenting the employee life cycle and creating a map is essential to keep track of the different steps that an employee takes. As a best practice, businesses create inventories of processes and documentation and store them in a defined place.
Define and communicate your HR policies
Keep track of the regulations in place and document any changes. Connect your internal documentation with the existing laws and regulations. Ensure that all your internal policies are compliant and that they are available to all employees. You can send regular reminders, run training sessions and more to ensure that all employees are aware of the policies in place and where to find them.
Automate processes where possible
Process automation reduces human error and streamlines the work effort of HR teams. This is also referred to as digital HR and translates as the investment in technology that boosts your HR function and reduces risks of non-compliance.
Review your policies and procedures on a regular basis
Make sure that all policies are reviewed on a regular basis. Once a year is the recommended frequency. Doing so and allocating the appropriate time for this activity will ensure that your policies stay current and that any regulatory changes are accounted for.
Applying these best practices to your HR compliance processes can significantly reduce your risks of non-compliance.
Your HR compliance checklist
To guide you with your HR compliance framework, we have created two checklists. Have a look at the HR compliance content checklist and the HR transformation checklist below.
HR compliance content checklist
Knowing which policies to implement may be a challenge. To guide you through this task, we have created a list of topics below that will help you define which policies you need:
- General company guidelines
- Rules when it comes to annual leave
- Policies on sickness, maternity or paternity compensation leave
- Security procedures and compliance
- Contract termination
- Health and safety at work
- Employee handbook or guide
- Management training and development
Reflect on these topics to identify if policies should be created for each. It is likely that all will be relevant to your organisation.
When creating the documents, be specific. Ensuring granularity while remaining comprehensive will reduce risks of non-compliance. Additionally, it is essential that all employees are aware of the policies in place and that they acknowledge that they have received and read them. Keep receipts of these acknowledgements so that you can refer to them if and when needed.
HR transformation checklist
If you are far behind when it comes to HR compliance, consider going through an HR transformation. Below is a checklist to consider when going through HR transformation.
- Analyse the existing HR processes and overall state of play
- Classify your existing documentation per type and identify any levels of risk associated
- Look into the latest employment laws and regulations in place; update any obsolete information accordingly
- Create a list of documentation and store it in an appropriate place
- Set out an ongoing process to review your documentation and how it is shared with employees
HR compliance is applicable at different stages of the employee life cycle. All these stages, from recruiting, onboarding, learning and development to retirement or offboarding need to be covered by the HR compliance process.
HR compliance examples
As mentioned, HR compliance touches all stages of the employee life cycle. Below are some examples of HR compliance.
Developing recruitment strategies
Diversity is a hot topic in the recruitment world. If the organisation makes it a priority to increase diversity, HR compliance should be part of the strategy to ensure fair HR practices.
Retirement and benefits compliance
Businesses have responsibilities when it comes to retirement or employment benefits. Understanding these responsibilities is essential to ensure that the business offers the correct retirement plans, health insurance and other company benefits. These elements have an impact on HR compliance and should be accounted for in the strategy.
HR compliance is an essential part of human resources. Having the appropriate documentation and processes in place will help businesses gain clarity. Beyond HR compliance itself, organisations may benefit from moving towards a people-first approach that goes beyond the legal requirements. Doing so will demonstrate that they put people first and increase the employee experience and satisfaction and as such bring many more benefits.
For more on the employee experience, have a look at the content below:
