UNDERSTAND WHAT IT IS AND THE IMPORTANCE OF THIS CONCEPT
In recent years, throughout the world we have followed the high level of corruption in various economic sectors. Several companies end up having their image and reputation weakened due to their proven involvement, both at the business level and in the political sphere.
The imperative need to know and practice compliance in day-to-day activities arose in the midst of this reality, which affects companies of all sizes and industries.
The concept of compliance in business aims to generate value for an organisation and ensure its survival. This practice arises from the great financial impacts caused by factors such as:
Absence of normative guidelines;
Misalignments to applicable laws;
Lack of adequate preventative tools;
Process management failures;
Operations without a structured information system.
Read on and learn more about this important concept and what the word compliance means in practice.
What is compliance in business?
The verb comply means to conform to a rule, which explains much of the concept of the word. The meaning of the word compliance is related to the conduct of a company and its compliance with the rules of regulatory bodies.
What is compliance in business, in short? It means to comply with laws and regulations.
This concept covers all the policies, rules, internal and external controls to which an organisation must conform. When in compliance, an organisation’s activities will be in full accordance with the rules and laws applied to its processes.
Both the company and all its people, including suppliers of interest, need to behave in accordance with the rules of regulatory bodies.
In addition, they must ensure faithful compliance with the various internal normative instruments. Only in this way will the company comply with regulations for environment, labour, finance, work safety, operations, accounting, etc.
How important is compliance in business?
Being able to say that a company is in strategic compliance is by itself a fundamental business strategy. It means that there is transparency and an increasing degree of management maturity. Being in compliance shows that managers and teams are in control of the processes and procedures, implemented and executed with effective political, commercial, labour, contractual and behavioural compliance.
Not being in compliance means being unnecessarily high risk, which can lead to financial, equity and market losses, among many others. Risk management and compliance are closely linked.
It is necessary to reflect and change management styles, adjust the way company information is handled and how people behave on a day-to-day basis, in order to achieve a level of excellence in compliance regardless of the business sector and size of the company.
Get to know some tips for how to align management with the concept of compliance
Now that you know what compliance in business is, check out some tips:
Use information systems that support monitoring of the company’s activities and that conform to compliance processes;
Have contract management for services and materials that is aligned with the levels of compliance established by the company;
Strengthen inspection and inspection routines of activities, including those that do not usually have certifications;
Focus on process compliance at the municipal, state, and federal levels;
Have an always active and updated system of standardisation in the company;
Have internal audit processes focused on the requirements to achieve compliance;
Have control systems with adequate depth degrees;
Have structured communication about the normative instruments of the company.
Why invest in this activity?
With these actions, the company reduces costs and expenses, increases its operating income and avoids losses. In addition, with the compliance of laws, the transparency of processes becomes a more consolidated reality, which brings greater confidence in the market.
The teams involved become more prepared and increase their performance, which is reflected directly in productivity.
The reputation and the good image are a reflection of the level of compliance that a company proposes to have. Therefore, using this concept to guide the good practices of the organisation significantly reduces all risks to the company, creating a healthier and more reliable environment.
The Role of HR Compliance
What is HR compliance?
It’s the commitment of your business to follow the working standards set out by UK employment law.
This affects your policies, procedures and documentation, as well as day-to-day responsibilities.
It also means your employees must receive all entitlements due to them as set out in their employment contract.
One of the biggest challenges when taking on legal compliance in HR is remaining compliant.
Why? As UK employment law is constantly changing and updating. Some of these changes occur annually and are easy to prepare for, such as national minimum wage increases.
Others might occur due to a tribunal ruling or other external factor, such as changes to gig economy laws.
What is statutory compliance in HR?
It’s wording such as this that often confuses people. So, let’s break it down.
If we want to get very specific, you can refer to three different types of compliance:
Statutory compliance refers to the legal obligation for an organisation to be compliant.
So, if new legislation passes saying that you must tint all windows in an office so as to reduce employees’ exposure to natural light—that would be a statutory obligation.
Failure to abide by this law could result in criminal charges.
Regulatory compliance refers to a legal obligation a regulating body issues.
The HSE, for example, is a regulating body, but is able to issue legal requirements relating to health & safety.
Like a statutory obligation, you could face criminal charges if you fail to adhere to it.
Finally, contractual compliance refers to an obligation made between yourself and the employee via an employment contract (or any other contract made between you and the other party).
As a contract is a legally binding document, any commitment made within a contract that you fail to meet could result in criminal charges.
HR compliance training
Keeping up to date with employment law updates and updating and amending appropriate document, policies, and contracts within the business is a daunting task.
That is why it’s a good idea to provide HR compliance training.
HR compliance audit checklist
A good place to start is by drafting a checklist of all of the different areas you want to ensure remain compliant.
You can be as specific with this as you like, narrowing the list down to each and every document, policy and procedure you want to audit.
To help you there, here’s a list of the areas you should review in any good HR compliance checklist on UK employment law:
Current employee handbook.
Training of Managers/supervisors/Team Leaders.
Practices relating to:
End of contract.
It’s also worth checking that all policies are consistent, comprehensible, and accessible. Ensure they reflect any and all relevant, legal developments.
Finally, make sure your employees acknowledge the receipt of policies with signed forms. You should keep them on file should you need to refer to them at a later date.
Not sure if you’re compliant?
Contact us today, we can offer a free HR audit to review your businesses level of compliance.