The importance of HR compliance

HR compliance plays a key role in ensuring your business adheres to UK laws.

However, navigating the intricate landscape of HR regulations can be a daunting task, and non-compliance can result in severe consequences, including substantial financial penalties, legal liability and damage to an organisation’s reputation.

Considering the vast range of HR responsibilities, coupled with the ever-changing legislative landscape, it becomes imperative for businesses to prioritse HR compliance, but how can you ensure you are doing everything right when it comes to HR compliance?

To answer this question, we’ve teamed up with expert HR consultants at Reality HR, who specialise in  supporting business owners and HR Directors to ensure that they comply with their legal and regulatory responsibilities.

Here’s what their Training and HR Consultant, Heidi Wadsworth, had to say about the importance of HR compliance and the vital steps today’s businesses need to take.

What is HR compliance?

HR compliance refers to the process of ensuring your businesses policies, practices and procedures adhere to relevant laws and regulations governing employment This can include areas such as transitioning employees in and out, equal opportunity, workplace safety, compensation and benefits and data privacy.

What does HR compliance involve?

HR compliance governs critical aspects of your organisations operations such as contracts, record-keeping, and policy-making, commonly referred to as statutory, regulatory, and contractual compliance.

As Heidi Wadsworth explains; “HR compliance requires a comprehensive understanding of contractual, employment, and regulatory law, and it’s an area that’s constantly evolving, making it challenging for businesses to stay on top of. Lots of our clients that we partner with at Reality HR, recognise the importance of HR compliance and appreciate the external support we offer to help mitigate any legal risks and to help them foster a positive workplace culture.”

According to Heidi Wadsworth, an in-depth Knowledge of these three compliance areas is the key to ensuring your business abides by the law and stays on top of its regulatory responsibilities:

Statutory compliance

Statutory compliance refers to the adherence to UK Employment Laws, which are enforced by the UK Government and determines critical aspects of employee rights, such as the maximum number of hours an employee can work per week and the minimum wage they must receive. These rules are mandatory for all registered businesses operating in Britain, as they form part of the UK’s legal framework governing employment.

Given that statutory compliance is subject to regular review, businesses must remain vigilant to any changes that come into effect. These changes may be driven by shifts in the political or financial landscape, or influenced by tribunal rulings, making it a dynamic and constantly evolving area that, while bound by law, is still subject to change.

Regulatory compliance

Regulatory compliance refers to legal obligations employers have to meet, as outlined by official regulatory bodies such as Health and Safety Executive (HSE) and the Information Commissioner’s Office (ICO).

Regulatory compliance is typically applicable to specific areas of your business, such as the requirement to have an official health & safety policy if your business has five or more employees and may also provide legal guidance on storing and using personal data, such as employee and customer information.

As with non-compliance with statutory regulations, failing to meet regulatory requirements can result in severe consequences, ranging from a temporary suspension of your right to operate to substantial fines and even imprisonment. 

Contractual compliance

Ensuring contractual compliance is an important aspect of HR, which includes managing the contracts your business enters into, with employees, suppliers, and external partners. Any violation of the terms stipulated in a legally binding document can result in a breach of contract and be considered an act of non-compliance. This could lead to civil proceedings and claims for compensation if the affected party decides to seek legal counsel. Therefore it is crucial to adhere to the terms and conditions outlined in the contract to avoid legal repercussions.

How can your business ensure HR compliance?

Ensuring HR compliance is crucial for businesses operating in Britain, especially considering the penalties for non-compliance.

Unlike some business areas where on the job training or graduate level hiring may suffice, HR compliance requires specialised knowledge of UK employment laws, company tax practices, and other legally-binding regulations. Therefore, it is vital that the person responsible for overseeing HR compliance, whether internally or externally, possesses the necessary experience and qualifications for the role.

Regular reviews and audits of your HR processes are also essential in maintaining compliance. This may involve automating your HR workflows or updating policy documents to reflect changes to UK laws.

Outsourcing HR compliance to a trusted HR services provider is another reliable way to ensure compliance. This option provides access to a team of HR professionals who possess the latest knowledge of best practices in HR compliance, giving businesses the benefit of expert guidance and support. If you require any further assistance, please contact HR Company, Reality HR.