As a business, it’s essential that you’re in compliance with all relevant laws and regulations set out under UK employment law.
Enter the human resources, or HR, department. As an essential part of any business, your HR department is responsible for both managing the people within your business and ensuring the company remains compliant with the latest regulations.
Although it’s easy to write-off HR as a secondary part of your business, the reality is that great human resources processes not only make your company more efficient, but also save money in the form of avoided fines and other penalties.
Below, Neil Debenham, Business Adviser and Corporate Consultant, goes into further detail on the importance of HR compliance for both small and large UK-based businesses.
What is HR compliance?
HR compliance is the process of ensuring your business remains fully compliant with all relevant UK employment laws. It’s an essential part of your business that will generally have an effect on everything from your hiring decisions to your policies, documentation and other processes.
Put simply, HR compliance means ensuring that your business follows the law and provides its employees with everything to which they’re legally entitled.
There are several aspects to HR compliance. The first is ensuring that your business complies with all relevant regulations. These can range from financial regulations to things like ensuring your workplace is physically safe for your employees.
Workplace regulations are numerous and varied. For example, one major aspect of complying with regulations is making sure that your business remains compliant and up-to-date with all of the relevant Health and Safety Executive (HSE) requirements.
Another aspect of HR compliance is contract compliance. This usually means making sure that your business fulfills its obligations under employment contracts, such as ensuring employees are paid on time, in full, and as specified in their work agreements.
Other aspects of contract compliance may include delivering workplace benefits, as well as key points of each contract with your employees.
A final aspect of HR compliance is ensuring that your business not only complies with existing laws and regulations, but also stays up to date as new legislation passes into law.
HR regulations are constantly changing, with new rules coming into effect and modifications to older regulations commonplace. As such, it’s important that your HR team is fully informed and up to date with both the latest regulations and potential changes on the horizon.
Falling behind and failing to comply with regulations may cost your business significantly if it’s accidentally noncompliant.
Tips for effective HR compliance
The most important aspect of HR compliance is building or working with a qualified, capable HR team to ensure your business is fully compliant and up to date.
For medium-sized and large businesses, it’s typically best to create an HR department in house to manage this aspect of your business. Qualified and effective HR staff will ensure you’re fully compliant at all times, including with regards to the latest laws and regulations.
For smaller businesses, working with an HR services provider is usually the most cost-effective option. These companies have the scale and specific focus on HR to provide effective services and are often more effective than developing a small HR department in house.
In general, the key to HR compliance is ensuring that your business clearly communicates with its staff. Make sure that you have up to date documentation, such as:
- Company employee handbooks
- Training materials for managerial staff and supervisors
- Specific policies for compliance
- Detailed practices for processes such as annual leave, contract renewal or termination, investigations and other common procedures
To make sure that your business is fully up to date and compliant, it’s important to audit your HR practices on a regular basis.
During this audit, your HR department will undergo an investigation to check that your business is compliant with all relevant laws and regulations. A thorough audit should look at every aspect of your business to check for potential issues that could expose your business to legal liability.
In addition to reviewing documents and processes, an HR audit should involve interviews with your staff, particularly managers and supervisors.
Just like auditing your company’s finances provides additional security and allows you to spot issues before they become severe, auditing your HR processes can help you to ensure your business is fully compliant at all times.
Closing thoughts
While HR compliance isn’t the most glamorous aspect of running a business, it’s an essential aspect of keeping your business legally and financially protected, as even a small HR mistake can often have significant costs, finishes Neil Debenham.
From creating clear policies to auditing your HR department, a variety of techniques can help you to stay compliant and ahead of the curve when it comes to HR policy.
Neil Debenham www.neildebenham.com