HR compliance and risk management for the global workforce
What exactly is a modern workplace? Is it an office cubicle or a kitchen table? Is it in the same city as the corporate office, or in another region – or even country? With a growing hybrid and remote global workforce, employers must find new and innovative ways to ensure that wellbeing, safety, and security standards are met inside an employee’s private home.
Businesses are also operating in a landscape of heightened legal risk. In 2021, workplace class action settlements reached an all-time high which, according to Forbes, is keeping “…corporate counsel and business executives awake at night.” And with an increased global focus on discrimination, gender, and pay equity, companies are under a microscope.
From the boardroom to the factory floor, businesses around the world are looking to their HR teams to keep them on the right side of both social and compliance expectations. The good news is that at their core, HR compliance and risk management measures are all about protecting employees – keeping them engaged, safe from harm, respected, rewarded, and happy in their work. So when smart HR solutions and technologies can help to ensure HR compliance – and support a safer and more fulfilling employee experience…that’s a win/win.
What is HR compliance?
Regardless of where employees are located or what role they play in an organization, HR compliance is intended to ensure and verify that a complex set of standards are consistently adhered to.
Typically, organizations must be aware of three different types of HR compliance, regardless of their location or industry.
For the most part, statutory compliance rules and laws are established and enforced by that country’s governing body. Government laws tend to reflect very broad issues such as minimum working age, discrimination, or minimum wage. Where relevant, statutory compliance must also incorporate international labor law and the different regional laws that exist between states or provinces within the same country. In some cases, international or regional laws may differ from that country’s federal ones. It’s up to the HR team to know which law supersedes the other and to always be up-to-date with the latest changes to such regulations. The stakes are high with statutory compliance and failure to adhere in some cases leading to criminal prosecution and serious reputational risk.
Regulatory compliance rules are set by specific (often public) regulatory bodies that exist within that region or country. For example, the Health and Safety Executive in the UK may lay down various non-negotiable workplace safety mandates. Other such official bodies may establish rules around mandatory training for certain types of roles, or other guidelines that are very specific to one industry or another. A further set of regulations may come from independent bodies such as labor unions, or from technology governance laws such as the GDPR, which dictate – for example – employee data rights and usage.
Contractual compliance regulations are typically an amalgam of company-specific rules and guidelines, along with contractually reinforced statutory and regulatory compliance rules. For example, if a country’s statutory labor laws prohibit workdays of longer than a certain number of hours, that company’s employee contracts may contain clauses to that end, which the employee must also agree to. Essentially, companies can write whatever they want into their contractual agreements as long as it complies with the over-arching statutory and regulatory laws in every region in which they operate.
Some key issues in HR compliance
For today’s companies, compliance issues are rapidly changing and evolving. HR departments must be adept at managing both big-picture business goals as well as being available to manage workplace relationships and handle various day-to-day issues as they arise.
- Cybersecurity and data protection. Remote employees pose unique privacy and security risks. Businesses must ensure that they can offer a working environment that safeguards both employee privacy and the security of the business. Additionally, new IoT and cloud networks that connect workers to devices and assets require employees to undergo and clearly understand very specific training and security protocols.
- Workplace safety. During COVID-19, much of the global workforce began working from home almost overnight and policy and compliance changes that otherwise would have taken years to embed, had to be implemented in a matter of days, leaving HR leaders unsure of the parameters around (among other things) issues like home office workspace standards, and how to handle workers’ compensation claims for home-based staff.
- Worker classification. In the past, HR teams have not traditionally recruited contractors and gig workers – leaving this to the department heads most familiar with their own specific needs. However, in an atmosphere of increased complexity and litigation, businesses are looking more and more to their HR teams to ensure consistency and compliance as to how these contractual workers are classified and engaged. The misclassification of contractors is having increasingly serious implications for businesses, not just in the United States but also in the EU and other regions worldwide.
- Physically distributed workers. The trend in remote and hybrid workforces is also seeing workers moving away from their home office jurisdiction. This leaves HR teams to grapple with regional differences in healthcare, pay equity, retirement, and other jurisdictional employment standards. It also makes it more difficult to enforce mandatory training and other onboarding and professional development activities that may previously have been completed in person.
- Pay equity, diversity, and workers’ rights: The Great Resignation refers to the post-pandemic sea-change in workers’ attitudes and priorities and has led to unprecedented churn in the labor market in many regions around the world. Where once it was a “buyers’ market”, today’s employees display heightened awareness and sensitivity to myriad employment and social issues. This has meant that many of the world’s biggest employers have had to rethink their existing policies – both voluntarily and as a result of increased pressure or changing political, statutory, and regulatory rules and protocols.
Automating the data process
Flexible, cloud-based HR software simplifies HR data compliance tasks by automating data management tasks and services on a single global platform in a three step process.
1. Supply Data
Data must be supplied to various regulatory bodies to comply with regulations such as gender pay gap reporting or CEO ratio reporting
2. Analyze Data
Diverse data sets must be analyzed to ensure all regions of your business are adhering to statutory and regulatory rules such as minimum wage, mandatory training, or compliance with benefits and pensions regulations.
3. Protect Data
Employee data must be protected both from security breaches and from mishandling. Security measures and protocols are regularly evolving and advancing, and regulatory laws such as GDPR require diligent implementation and frequent updates.
The cost of non-compliance – and the benefits of getting it right
For almost 20 years, the annual Seyfarth Workplace Class Action Litigation Report has tracked workplace-related class action litigation around the world, giving an informative overview of trends and shifts in this space. Its findings demonstrate that 2021 was an unprecedented year for workplace litigation, seeing the largest class action lawsuit numbers and dollar amounts in the history of the report. Further landmark settlements came in 2020, with the three most expensive workplace lawsuits in history, all centered around cases of executive misconduct or harassment, with payouts large enough to cause serious corporate damage.
The most frequently litigated and settled actions continue to involve issues around pay equity and employee classification, including questions regarding hourly vs. salaried employees and overtime. But in the past few years, businesses are seeing a sharp rise in claims over various types of discrimination, including increased complexity around matters related to gender. And while any workplace litigation is damaging and unpleasant to all parties involved, cases of discrimination or inequity tend to result in substantial reputational damage from which companies can struggle to recover and heal.
Of course, individual HR teams may be feeling a bit overwhelmed by the changing compliance landscape but in reality, these workplace trends and attitudes are shifting across the globe, and we’re all in it together. And on an optimistic note, businesses have never had greater access to smart technologies and powerful tools to help them stay on top of HR compliance, protect themselves from risk – and more importantly, ensure that their employees are secure, well cared for, and able to get on with the business of innovation and growth.
How smart technologies transform HR risk
- Relevant data is integrated across the business. Especially when integrated with modern ERP systems, centralized, smart HR technologies provide access to accurate real-time reporting regardless of which department or where on the globe an employee is located. Whether to confirm an IT compliance question or to determine who needs safety training updates on the factory floor, HR teams need device-friendly tools that they can customize as needed, and access relevant departmental data sets without delays and blind spots.
- Compliance updates are automated in real time. In order to maintain compliance, employers must remain up-to-the-minute on both employee status changes, and changes and amendments to statutory, regulatory, and contractual rules and regulations. Modern HR technologies can help to:
- Automate the finding, notification, and implementation of any new or changing regulations across the global business
- Across the global business, use localization frameworks and liaise with regional software product experts who know country-specific and regional regulations
- Automatically spot and notify the employer of any changes to employees’ status
- Maintain calendars and completion records of mandatory training and certification for employees
Improve regulatory adherence and lower legal risk by automating compliance training.
- Employees’ privacy is protected. Data usage and employees’ data protection rights vary from region to region and compliance issues can be extremely complicated for these matters. Furthermore, the best companies know the importance of keeping their employees safe and secure, and building a culture of trust. The best HR management systems will help businesses secure their people data with complete privacy, transparency, and up-to-the-minute adherence to the latest compliance standards, as well as audit controls to build trust and reassurance.
- Payroll is globally standardized and automated. This ensures that all laws, rules, and compliance criteria across a company’s operating regions are standardized and automatically updated. Global end-to-end payroll processing and auditing controls helps to reduce risk and operational costs. Payroll systems are connected to finance though a unified system and slow and error-prone manual payroll data sharing and entry is reduced, giving a more robust and accurate picture of payroll and benefits.
- Employees have a consistent HR experience across the globe. Standardizing the employee experience and ensuring that staff feel supported regardless of where they work – these are both critical ways that connected HR solutions can help to retain and care for staff, and reduce the risk of dissatisfaction and litigation.
Next steps toward global HR compliance
Without question, the use of smart technologies can help to reduce the risk of non-compliance and ensure a consistently positive workplace environment across any business. But of course, we all know what the “H” in HR stands for and above all, the practice of HR remains grounded in relationships, communication, and human engagement. As part of your journey to transform and modernize your workforce, it’s important to first establish excellent change management strategies and communicate them clearly across the workforce. This starts with breaking down both human and systems silos and talking to team leaders across every operational area – to uncover the greatest areas of risk as well as the most exciting opportunities for short and long-term growth and improvement.
When you’re ready to move forward, look for cloud HR solutions that are not only easy to use but are designed to fully integrate into every aspect of your organization, regardless of location, worker classification, or department.
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