How to Navigate HR Compliance in 2023
Embarking on a journey towards HR compliance may seem daunting. But it is crucial to understand the intricacies of labour laws and regulations. This knowledge is necessary to safeguard the rights of both employees and employers.
During a Parichay‒Ask the Expert session, Amit Sharma, Vice President, Head ‒ People & Culture, Volvo Group India, shared valuable insights on HR compliance. He provided a wealth of information to help navigate the complex terrain of labour laws and regulations.
Below are some enlightening excerpts from the discussion, along with some pertinent facts from greytHR's research.
What are the challenges of HR compliance?
- Changing labour laws & regulations
- Statutory compliance demands
- Employee grievances & disputes
- Data privacy & security management
- Accurate record-keeping
- Non-compliance risks
- The need to stay informed
What are the different types of compliance in HR?
- Statutory compliance: It involves following various government laws and regulations, such as the Factories Act, Industrial Disputes Act and more.
- Regulatory compliance: There are different regulatory agencies that set rules and regulations for companies in various industries. (e.g., DGCA for airlines and IRDA for insurance). HR helps the organisation comply with some of the regulations.
- Contractual compliance: Governed by the Contract Act, it refers to the employment contract between an employer and an employee. It can apply to full-time, part-time or internship assignments.
- HR technology compliance: Organisations deploying technology must ensure that it complies with local and data privacy laws, among others.
- Internal compliance: This compliance is for an organisation's internal processes and working methods, such as workflow approvals and policies.
- International law compliance: This refers to compliance with the different laws in different countries where the organisation operates.
- Country-specific compliance: Each country has specific laws, and the organisations that operate there are expected to abide by them.
- Accounting compliance: This covers accounting and Companies Act compliances an organisation is expected to meet.
What are the various types of compliance required for Indian payroll?
The payroll department is responsible for ensuring compliance with multiple legal requirements. Given below are the most important ones for the Indian payroll.
- Minimum wage compliance
- Payment of wages compliance
- Income tax compliance
- Social Security compliance (ESI, PF, etc.)
- Professional tax compliance
- Gratuity compliance
- Employee Deposit Linked Insurance compliance
- Bonus compliance
- Employee compensation compliance
- Factories Act compliance (related to leave)
What are the best practices to enforce HR compliance in organisations?
The most important practice for HR compliance is to have an ethical and compliant culture within the organisation. Other key practices include:
- Ensuring policies are in line with laws
- Regular compliance audits
- Storing records in a central, accessible location
- Using compliance tools
- Providing training and guidelines
- Enforcing job rotation
- Communicating the importance of compliance
What are the common risks of non-compliance?
Non-compliance risks include loss of reputation, customer trust and brand value. Shareholders and investors may also lose faith in the company's leadership. Also, negatively impacted stakeholders or the government might file lawsuits.
Non-compliance can also result in benefit withdrawal, operations suspension and penalties against directors, factory managers or occupiers. These consequences can have severe financial and operational impacts, including fines and closure of the organisation.
What is the importance of a compliance management system?
A robust compliance management system is essential in an organisation. When that is in place, both HR and the stakeholders can:
- Measure the different types of compliances an organisation has to follow
- Receive real-time updates, ensure process-driven compliance and build
a culture of transparency and trust
- Identify compliance issues quickly, avoid penalties and generate reports easily
with the system
- Remain updated with current laws and avoid non-compliance
- Benefit from good governance, transparency and visibility into compliance status