The consequences of non-compliance and why you need experts to weigh in

Compliance remains to be one of the main areas that HR leaders manage in their daily operations. More than just hiring employees and computing compensation and benefits, HR leaders are in charge of developing policies to ensure that their company adheres to legal and regulatory requirements and maintain positive employee relations.

Data shows that HR and payroll departments spend 36 hours per week on compliance-related activities―from tracking regulatory proposals to creating and communicating new policies. HR and payroll professionals even believe that they can handle other tasks such as improving payroll efficiency, manager effectiveness, internal communications, organizational strategy, and performance management within the timeframe that they typically allot for compliance-related activities.

But it often can’t be helped. Compliance is a significantly important task of every HR leader―the better that they comply with laws, the more that their organization can cater to their employees’  welfare and even boost their brand reputation.

Common HR compliance issues

Compliance issues often occur in seven categories of employment laws, which are anti-discrimination laws, wages and working hours, immigration, benefits, safety, and union laws. The role of the HR leader is to remain updated with these employment laws and communicate them accordingly to both the employer and their employees to ensure that everything is clear from both ends.

 But what happens when HR leaders fail to comply with these laws?

 Most of the time, companies receive hefty fines and penalties. For example, if an employer in the Philippines breaks the Anti-Age Discrimination in Employment Act, they are subject to a fine between P50,000 to P500,000 and/or an imprisonment between three months to two years. At this rate, complying to laws is more cost-efficient than breaking them.

 Aside from the financial damage, employers can be subject to a low reputation for non-compliance. Potential hires may stray away from them while their existing employees may consider leaving the company for having an inefficient HR department and compliance system.

 Moreover, companies may lose access to potential partners and markets for failing to adhere to laws. These two things are essential in every business―losing them would bring non-compliant companies to a dark abyss they might never come out from.

How companies can stay HR-compliant

There are several ways companies, from startups to multinational companies, can remain compliant with laws and regulations. First, HR leaders must learn to constantly communicate laws and potential compliance risks to the higher-ups. Employers need to know what’s happening on the ground level, after all, and they wouldn’t want any issues being raised with labor agencies if they knew how to respond to them internally. Staying up-to-date with employment laws can help them direct HR on what needs to be done for positive employee relations.

 Second, HR leaders must keep and continuously update an employee handbook―an important document that contains an organization's history, mission and vision, as well as its policies and procedures. Employers typically provide new employees with the employee handbook during the onboarding stage and let them sign a document acknowledging that they have received and read the handbook. In this way, employees are made aware of their rights while employers are protected from discrimination or unfair treatment claims.

 Third, HR leaders are recommended to conduct scheduled HR compliance audits, especially in companies where HR departments are understaffed, which could lead to gaps in their compliance processes. By scheduling HR audits, HR leaders can properly identify and resolve compliance issues before they become subject to complaints, non-compliance notices, and penalties.

 Last, but certainly not least, companies need to hire HR leaders that are well-versed with laws and compliance. HR leaders must have the acumen to make appropriate policies to ensure that both employees and employers are aware of their respective rights. Similarly, companies can also retrain their existing HR leaders on employment laws and legal requirements to ensure that they can develop policies that are up-to-date and appropriate for their workforce.

 If companies have no means to hire an HR professional or retrain their existing HR team, they can simply outsource HR services instead. Employing a dedicated HR service provider can ensure employers that their compliance processes are well-taken care of by HR and legal experts. For instance, Q2 HR Solutions, one of the leading recruitment and HR consulting companies in the Philippines, offers all-around compliance services such as legal documentation and registration, manpower recruitment and management, and operations management. Its People4People service package enables HR leaders to focus on their core operations and minimize costs and risks.

 Q2 HR Solutions has been in the HR industry for more than two decades―proof that they have the right knowledge and skills to help companies comply with laws and develop appropriate policies for their workforce.

 Evidently, compliance can make or break a company. How employers and their HR leaders systemize their compliance processes can greatly affect their finances and daily operations.