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HR Compliance Guide 2024: Ensure You Are Checking the Right Boxes

15 min read

hr compliance cover bannerJust as the human resources function is indispensable, HR Compliance is a non-negotiable corporate duty.

Former Chairman and CEO of GE, Jack Welch once said, “HR should be every company’s killer app. What could possibly be more important than who gets hired?” Who you hire, doing things in the right manner and keeping the law is an absolute given with statutory compliance.

HR compliance ensures the smooth functioning of your organization without nasty surprises. This includes prevention of unexpected losses due to legal complications arising out of non-compliance. Far beyond another mundane process, statutory compliance is about building a credible work environment that abides by legal standards, promotes fairness, and safeguards the rights of employees.

What is HR compliance?

The process of ensuring that an organization’s HR policies and practices adhere with applicable laws and regulations is called HR compliance. This covers a whole gamut of functions such as recruitment, benefits, payroll, workplace safety, equal employment opportunity, employee rights, data privacy, and more.

By prioritizing statutory compliance, companies mitigate legal risks, uphold their reputation, and foster a positive work culture. To illustrate, consider employee work hours. Although it is within the responsibility of HR teams, it is also governed by specific labor laws.

Even if a company must urgently deliver its goods and services to hit a deadline, it cannot do so by ignoring employee rights. HR compliance requires it to ensure humane work conditions with a focus on employee safety and wellbeing.

Similarly, when calculating salary components and deductions, prevalent tax laws apply. This includes provident fund, medical insurance, and reimbursements. Operating in multiple regions, states, and countries requires a close understanding, and statutory compliance with the legal requirements of the country.

Sometimes, corporate policy clauses in an organization may also surpass the requirements of HR compliance. A good example is maternity and paternity leaves offered by companies. Depending on the organization’s policy the duration of leave offered may exceed the requirement of the law. Hence, HR compliance is the bare minimum obligation a company has, wide adverse consequences in the event of non-compliance.

Why is HR compliance important?

We have touched upon how HR compliance protects organizations from unexpected penalties, fines, and legal disputes due to non-compliance with relevant laws. In addition to revenue protection, it also protects the reputation of the business.

Secondly, HR compliance ensures the fair treatment of employees without prejudice and ensures their rights are protected. This helps prevent workplace discrimination, harassment, and other violations.

If an employee has a conflict with the management, or senior employees have an unregulated conduct with a junior due to their position, HR compliance ensures that redressal is available through an unbiased framework.

These include committees and processes such as platforms as well as accountability for grievance redressal and communication. Statutory compliance promotes consistency and transparency in HR practices to build trust among employees. This strengthens employee commitment to the organization.

What is HR’s role in compliance?

HR professionals are at the forefront of ensuring HR compliance within an organization. They are responsible for understanding and interpreting labor laws, monitoring policy changes, and implementing necessary adjustments.

HR teams collaborate with legal advisors all the time to stay updated on statutory compliance requirements. This helps them ensure that policies and procedures laid down in the organization are in line with the latest regulations. They also play a crucial role in educating employees about compliance standards, handling complaints, conducting internal audits, and driving a culture of compliance throughout the organization.

Challenges in HR compliance

The myriad laws that deal with human talent, resources, and rights means that ensuring statutory compliance with the law can be complicated. In 2024, the Indian government introduced new labor codes. You can read more about these changes here. HR compliance has its fair share of challenges. Here are some of the common hurdles faced by HR professionals:

  • Keeping up with ever-changing laws

Labor and business laws are constantly evolving. Multiple laws with constant revisions and updates make learning for HR professionals a continuous journey. For example, salary calculations for employees can change when the income tax laws are updated in a particular financial year.

Hence, staying updated with the changes and amendments to HR-related laws is crucial. This process can be a daunting task for HR teams.

  • Navigating complex statutory requirements

Statutory compliance involves juggling multiple statutory requirements at the city, state, country, and global levels. Each jurisdiction may have its own set of laws and regulations, adding complexity to the compliance landscape.

That said, non-compliance brings with it the risk of lawsuits or lost business opportunities and effectively loss of revenue as a result. Therefore, it is necessary for companies to build their policy upon the foundation of the legal framework in the market that they operate in.

  • Balancing diverse recruitment strategies

Since the topmost priority for HR professionals and teams is to hire new talent into the organization, it also opens HR processes to scrutiny of the objectivity of the system. Compliance requirements at various levels may require specific guidelines on the gender and diversity mix of employees recruited.

Companies must therefore employ recruitment strategies that align with compliance requirements while also meeting organizational goals, such as diversity and inclusion. Understanding the legal implications of different strategies is crucial.

  • Managing benefits compliance

Determining which benefits to offer employees and ensuring compliance with relevant laws can be challenging. HR professionals must carefully weigh the pros and cons of each benefit option and navigate the complexities of benefit administration.

How do you ensure HR compliance?

Achieving and maintaining HR compliance requires a proactive approach and strategic planning. Here are some key steps to ensure HR compliance within your organization:

  • Document policies and procedures

Start by documenting all HR policies and procedures relevant to your business. These should cover various areas such as recruitment, employee onboarding, compensation, benefits, performance management, and termination. Well-documented policies serve as a reference point for employees and facilitate consistent implementation.

  • Consistent application of policies

It is not enough to have policies in writing; they must be consistently applied across the organization. HR professionals should ensure that policies are enforced uniformly and fairly, from the top management down to all employees. Regular policy reviews and communication sessions help reinforce consistency and keep employees informed.

  • Accessibility and communication

Make HR policies easily accessible to all employees. This can be done through an employee handbook, intranet portal, or other digital platforms. Regularly communicate policy updates, changes, and reminders through company-wide meetings, emails, or internal newsletters. Encourage employees to seek clarification and provide feedback to ensure clarity and understanding.

  • Training and education

Conduct regular training sessions to educate employees about HR policies, compliance requirements, and best practices. Training should cover topics such as anti-discrimination, harassment prevention, data privacy, workplace safety, and any specific legal obligations related to the industry or jurisdiction. Training programs can be delivered through workshops, webinars, or e-learning modules.

  • Stay informed about legal changes

HR professionals need to stay updated on labor laws, regulations, and any changes that may impact HR compliance. Establish processes for monitoring legal updates, such as subscribing to relevant newsletters, following industry publications, or consulting legal experts. Regularly review and update HR policies and procedures to ensure alignment with the latest legal requirements.

  • Conduct regular compliance audits

Implement a system of regular compliance audits to assess the effectiveness of HR policies, procedures, and practices. Audits can help identify any gaps or areas of non-compliance in advance, allowing HR teams to take corrective measures promptly. Engage internal or external auditors with expertise in HR compliance to ensure a comprehensive review.

  • Leverage technology and automation

Consider investing in HR software or compliance management tools that streamline HR processes and automate compliance-related tasks. These tools can help with payroll calculations, leave management, documentation, reporting, and staying updated with changing regulations. By reducing manual effort and increasing accuracy, technology can enhance HR compliance efforts.

Best practices for HR compliance

In addition to the HR compliance checklists, implementing the following best practices can further enhance compliance in HR:

  • Foster a culture of legal compliance in HR through effective communication, training, and leading by example.
  • Establish strong partnerships with legal experts to stay informed about legal changes and seek guidance when needed.
  • Encourage open lines of communication within the organization, enabling employees to report compliance concerns without fear of retaliation.
  • Regularly review and update employee handbooks, policies, and procedures to align with evolving legal requirements and organizational needs.
  • Engage in continuous learning and professional development to stay abreast of HR compliance trends and best practices.hr compliance infographic

How Keka can you with HR compliance

HR compliance is a crucial aspect of modern-day business operations. Given the sheer number of variables with each law and the consequences of non-compliance, it can be a nightmare for an HR professional.

Relying on technology can be a huge relief to not just comply with the law, but also streamline your processes to be intuitive for your workforce. As a SaaS company with a steadfast focus on building an employee centric HR platform used by over 6500 businesses across India and the world, Keka knows the solutions to your challenges.

You can protect your employees, mitigate legal risks, and foster a positive work environment by simply adapting a tested and trusted solution with a low entry barrier. HR professionals, HR leaders, and business owners have a responsibility to ensure HR compliance by staying updated with labor laws, implementing effective policies and procedures, and fostering a culture of compliance throughout the organization.

Leave compliance to us, while you focus on building culture and boosting employee engagement at your organization.

HR Compliance Checklist: What you need to keep in mind

To ensure comprehensive HR compliance at your organization, you must follow a checklist of the best practices:

  • Document Policies and Procedures

Documenting all policies and procedures is a critical step in ensuring legal compliance. It serves as a reference point for employees and HR professionals, providing clarity on expectations and guidelines. Ensure these documents are reviewed and updated to stay relevant with the law of the land. 

  • Consistent Application of Policies and Procedures

If documentation is the first step, application is the second. HR professionals should ensure that policies are followed top-down to foster a culture of compliance. Frequent communication and training is a good way to get this done.

  • Remove Barriers

Making policies readily available and communicating updates effectively can help employees understand and adhere to the established guidelines. Additionally, creating HR compliance checklists and process flows can assist HR professionals in ensuring all necessary steps are followed consistently.

  • Provide Training

Regular employee training sessions on HR policies and compliance is essential. This enhances employees’ understanding of compliance expectations. Sessions can cover topics such as anti-discrimination, sexual harassment prevention, and data privacy, among others.

  • Stay Updated with Laws and Regulations

HR professionals should proactively monitor legal changes, engage with legal experts when needed, and adjust policies and procedures accordingly. This proactive approach helps organizations remain compliant and minimizes potential risks.

  • Conduct Regular Compliance Audits

Regular compliance audits are an integral part of ensuring HR compliance. These audits assess the effectiveness of existing policies and systems, identify areas of improvement, and help mitigate potential risks. 

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    Meet the author

    Keka Editorial Team

    A bunch of inspired, creative and ambitious youngsters- that’s Keka’s editorial team for you. We have a thirst to learn new subjects and curate diverse pieces for our readers. Our deep understanding and knowledge of Human Resources has enabled us to answer almost every question pertaining to this department. If not seen finding ways to simplify the HR world, they can be found striking conversations with anyone and everyone , petting dogs, obsessing over gadgets, or baking cakes.

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