5 key compliance challenges for HR teams

By 21/06/2019 June 24th, 2019 Human Resources

With the workplace now wrapped in perhaps more red tape than ever, HR departments are under increasing pressure to keep their businesses on the right side of the law.

Maintaining compliance with ever-changing employment rules and regulations requires HR to keep up-to-date and adapt at pace, or face the prospect of costly fines and even more costly reputational damage.

In extreme circumstances, some compliance failures could even become a matter for the criminal courts.

Of course, HR has always played a key role in an organisation’s compliance structure. But rarely has the work environment undergone so many legislative changes in such a short space of time.

Just when you think you’ve got a grasp on the latest laws, it seems another rule comes along to usurp it. The minimum wage, the living wage, data protection, health and safety, workplace equality and gig worker rights – are just some of the areas affected by the legally binding change in recent times.

It means HR needs to be more proactive than ever in their pursuit of compliance, finding time amongst the admin burden to follow and meet the latest legal developments.

In this blog, we’ll look at five of the top compliance challenges for HR teams right now, and the procedures you can put in place to help your bosses rest easy…if only for a while (!).

1) GDPR

Introduced in 2018, the General Data Protection Regulation (GDPR) has had a significant impact on the way businesses deal with data.

Often, it’s only considered from the perspective of customer data, but the regulations apply in exactly the same way to employee information – making it a real matter of interest to HR.

It’s HR’s job to ensure the protection and transparent use of employee’s personal and payroll data, firstly by making sure that you have adequate consent to hold and use it. This might seem obvious, but shouldn’t be assumed.

For instance, when an employee leaves the company, do you still retain the right to use their data for reporting purposes? Do you have permission to include data about job applicants in reviews of your recruitment process?

In every instance, you need to be able to prove that individuals have consented to the use of their data for that specific purpose. Equally, you’ll need to have systems in place to remove personal data (from all across your business) in the event that consent is later withdrawn.

2) Right to work

The Right to Work regulations are nothing new but remain a fundamental pillar of HR’s compliance obligations. Should your business be found to be employing someone illegally, and you’ve failed to carry out the necessary checks, the punishments can be huge.

In serious cases, the charge can lead to criminal convictions for employers.

To ensure compliance with the legislation, Right to work checks should be carried out in advance of employment, and in accordance with the Home Office’s own checklist

Where the employee’s right to work is time-limited (for instance restricted by visa), it’s equally important that a re-evaluation is scheduled prior to expiry.

This is one review that can’t afford to slide.

3) Working time

The Working Time Directive sets a limit on weekly working hours, dictating that ‘the average working time for each seven day period must not exceed 48 hours, including overtime’

The directive also includes guidelines on rest breaks, minimum annual leave entitlement and certain provisions for night-time workers.

With working hours now arguably more fluid than ever (more staff answering emails at home in the evening, for instance), the onus is on HR to ensure this time can be accurately tracked.

The European Parliament also recently approved new minimum rights for gig economy workers, so if your workforce is a dynamic mix of permanent and casual staff, you’ll need to pay special attention to complying with contractor rights.

For example, the new legislation dictates that any mandatory training for gig workers has to be provided free, and counted as paid working time.

4) Brexit

The real challenge of the three aforementioned directives is that they could all soon be set for further change.

At the time of writing, Britain’s exit from the EU continues to hang in the balance, but if and when Brexit does finally take place, it’s likely to have a huge impact on HR’s compliance obligations.

GDPR is an EU-driven directive and could necessitate some adjustment in the wake of Brexit. Many HR departments believe this will be the case and are concerned that data protection will get more difficult if or when Britain leaves the EU.

Of course, the Right to Work legislation is the piece most likely to be affected in a major way. With a Brexit deal yet to be struck, there’s no definitive answer yet on the rights EU workers will have in this country.

In the event of no deal, EU nationals working in the UK are at risk of losing their current rights and will need to apply under the EU Settlement Scheme by 31st December 2020 to re-secure their status.

In late 2018, Immigration Minister Caroline Nokes indicated that post Brexit, employers will, therefore, be expected to check whether EU nationals in their existing workforce still have the right to work in the UK, despite no clarity on how these checks would actually be carried out.

Add in further challenges around recruiting new workers from Europe (who may soon require a Tier 2 visa to work in Britain), and it’s clear that Brexit will bring a huge burden to HR departments across the country.

5) Gender pay gap reporting

In 2017, the UK government made it mandatory for businesses with more than 250 employees to provide annual reports on their gender pay gap.

To remain compliant with the ruling, the data must be reported to the government directly via the gender pay gap reporting service, and also published publicly on the company’s own website.

To date, no business is known to have been punished for failure to comply, or indeed for the publishing of inaccurate figures. According to reports in The Guardian, some business has even managed to file mathematically impossible pay gap information and still avoided any sanction.

It seems clear, however, that as the quest for workplace equality ramps up, punishments for non-compliance won’t be far away. It’s also been suggested that pay gap reporting may be extended to all companies with 50 employees in the not too distant future.

For HR departments not currently affected, it’s a case of ‘watch this space’ – and arguably, something you should be reporting internally whether mandated or not.

In summary

Such is the ever-evolving nature of workplace legislation, it feels like standing still for five minutes could be enough to see you fall out of compliance somewhere.

It’s therefore vital to keep your finger on the pulse of legal changes in your industry and beyond, and to simultaneously ensure your employee records are accurate, up-to-date and complete at all times.

Maintaining an HR Compliance checklist should also help you keep across it all, and this should be reviewed on a regular basis. Finding the time to do it will be one of your biggest challenges – but the consequences of failure mean you can’t afford to.

If GDPR is a concern, then why not grab a copy of our GDPR compliance checklist for HR?

Natural HR

About Natural HR

Natural HR is a cloud-based HR software company for growing businesses with 100+ employees. Since launching in 2010, we’ve been building a comprehensive suite of HR functionality that equips the small to medium-sized enterprise with everything needed to build an effective and efficient HR operation.

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