Compliance Issues Every HR Leader Should Know

Complying with internal policies and external regulations is fundamental to business. HR is accountable for employee-related compliance, statutory and internal.

It is a norm for large corporations to appoint a Chief Compliance Officer (CCO) who oversees adherence to internal Policies and Processes, is responsible for investigations into cases of violations, ensures training to build awareness and reinforce compliance metrics, and keeps track of organization-wide adherence to norms. CHRO and his team work closely with the CCO to co-regulate people-related compliance.

Companies fine-tune the role to be performed by a CCO in keeping with the guidelines issued by the International Compliance Association (ICA). This body helps Multinational Corporations (MNCs) manage the framework around compliance, from collating the job descriptions of compliance team to prescribing a direction to formulate  and structure the roles and responsibilities. HR acts as the link between the employees and the Compliance team.

What makes compliance complicated?

Compliance concerns itself with statutory authorities who regulate industry standards, government departments, and  other governance bodies. At the same time, it takes into account the safety and well-being of each individual employee. Since a compliance issue is one which often has a zero-tolerance policy, it helps to have a dedicated CCO and Compliance Team to develop a guidebook that serves all employees throughout the course of the operations. But all matters of compliance such as statutory holidays, leave policy (example maternity leave), compensation (example adherence to minimum wages, payment of bonus act, payment of wages act, equal remuneration act), employee safety and well-being are direct responsibilities of the HR team.

Examples of a few situations are as below : –

Legal issues: Laws varying between separate jurisdictions and regions can cause legal compliance issues. Besides, laws can differ at the state or national level. In the context of MNCs, laws are even more heterogeneous. Compliance on Laws and Statutes is mandatory and businesses stay on top of issues by hiring legal aid. Law firms with specialization in Compliance Services can help prevent issues from cropping up.  Immigration laws, European Union regulations are some of the international norms which need specialists to manage.

Employee welfare issues: Right from the compensation package to other bonuses and perks, working conditions, and safety regulations at the workplace can raise compliance issues. A concern that is heard commonly in this domain is the payment of less than minimum wages in certain industries. Whether or not an employer offers a medical insurance package to the employees and their next of kin is an issue that would fall under the purview of employee welfare.

An example of this  would be the Factories Act, 1948 . There have been umpteen amendments to some of the clauses, keeping in tune with the needs of the changing time. Maternity benefits have become more regulated, flexible and balanced. Strict adherence is imperative.

Harassment issues: Despite provisions for welfare, respectful treatment of co-workers, and awareness campaigns on standards of behavior, issues of discrimination and harassment raise their heads. It is important to have policies in place and define them very clearly so that no wrongdoing may demoralize staff. Discrimination in the context of gender, age, race or physical ability are all grounds for an issue to spiral off into legal action. It helps to have rules in place in line with those of the local and national government. Code of conduct should be formalized and shared right at the initial stage of recruitment, and this should be followed up with mandatory training so that all behavioral requirements are conveyed without ambiguity.

Many companies ensure that all employees, old and new, are on the same page with regard to standards of behavior and non-discriminatory action through an ‘employee handbook’. The minutest details of what constitutes acceptable and objectionable behavior are offered in unambiguous terms in the handbook. In light of Supreme court judgment in the Visakha case, norms pertaining to SHW (sexual harassment at workplace) has taken centre-stage in organizations and compliance accountability rests with the CEO and top leadership.

Technology driven issues: It is common for organizations of today to allow telecommuting, working from home, or ‘bring your own devices’ (laptops, smartphones, and tablets) to work. This is a huge step towards making employees maintain work-life balance and helping them become more productive as a result. However, it does bring up issues such as security of sensitive information, free access to intellectual property, systems security and IT administrative issues.  Protocols need to be well-defined, and keeping track of these protocols in the day-to-day is another challenge. Compliance providers have to keep themselves upgraded technologically to keep on top of these issues.

Data Protection is crucial for MNCs that operate under multiple laws. The Fundamental Rights as listed in the Indian Constitution do not have a Right to Privacy option, but it is afforded as part of Article 21 of the Constitution of India which details the Right to Life and Personal Liberty in Section (1) (a). Privacy is an issue that’s more prevalent and relevant in today’s context than it was, say, a decade ago when Cloud Computing and use of remote storage servers was rare. To keep clear of individual issues of compliance and risks of legal action, it makes sense to get consent from employees. HR is the prime mover which guides employees and the C-suite alike through these motions and ensures smooth running for the organization without any compliance hiccups.

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