Though the process of ‘unlock’ has started and life is returning back to the so-called ‘New Normal’ gradually, there will be a total change in the operating procedure than it was before Corona Pandemic.
Like every other thing, the HR compliance for SME will also change concerning the New Normal processes. Thus, HR managers will have a tough time going forward. They will have to spend extra effort in aligning the policies with the changed norms.
Thus, they can deal with Statutory Compliance Management.
The central Government of India and seven state governments invoked powers and provisions under The Epidemics Act 1897. It was followed by the dangerous situation happening in some of the European countries and the USA after the outbreak of Coronavirus.
The step was taken in anticipation of crisis situations arising post lockdown in the coming months.
As per the reports published by E&Y, there will be more than 150 obligations related to Statutory Compliance as a result of the Covid-19 lockdown situation. No sector, big or small, will remain unaffected by it.
From the entertainment industry to manufacturing, banking to telecommunication, and hospitality to healthcare; everyone will get impacted by it.
An organization will get impacted by it in all aspects, corporate governance, and disclosure, working capital, supply chain, data privacy, workplace health, safety, recruitment, and so on.
What is HR Compliance?
When an organization gives the commitment to run the business and treat employees by following the series of regulations in agreement with a regulatory body or government, it is called HR compliance.
HR compliance services are third-party service providers that help organizations to remain compliant for HR processes. Since it is specialized work, it is not possible to manage it in-house. The task has to be outsourced to the experts.
To keep an organization HR compliant, it is mandatory to prepare a checklist of actionable items. It ensures that nothing is missed out, which may result in non-compliance. The liability of it is high. Hence, it is better to be ready with the hr compliance checklist.
It is a useful tool in assessing the compliance risk in the crisis situation. It considers all the required domains to assess your compliance risk. Especially, during unusual crisis situations like the Covid-19 pandemic, such a checklist will be incredibly helpful.
By preparing a comprehensive Compliance Checklist, the HR team reduces the efforts and time required to spend on compliance audits.
HR compliance best practices help in minimizing the non-compliance issues and increasing the credibility and reputation of the company.
What if there are HR compliance issues?
Governments and regulators have understood and identified the need to reduce the burden on businesses that got the worst hit by the Covid-19 pandemic. They are relaxing rules and expectations because of the unexpected and unprecedented challenge to the business and people working there.
Does it mean HR should consider it as a free reign? No, it is not a time to ignore any organization policy or law for that matter. It is also not a time to engage in any unethical conduct just because the rules have been relaxed. It will add another risk to the current crisis scenario by doing that.
All the regulatory and HR Compliance matters will come back to normal once the situation becomes normal. Organizations that will have compliance failure will be held liable for their actions.
Therefore, it is all the more important and mandatory to practice ethical behavior and compliance policies. Any violation will be looked at as a deliberate attempt to take unfair advantage of the unexpected situation.
It is needless to say that the reputational harm associated with such an allegation will be disastrous for the organization.
Tremendous efforts will be needed to mitigate the fallout. Hence, the best thing is to follow regulatory compliance with more sincerity. They need to formulate the HR Process for that.
What is included in an HR compliance checklist?
Elements of the HR Compliance checklist are given below. This checklist considers statutory compliance and regulatory compliance for the organization and employees. It is important that the managers consider labor and taxation laws and regulations while formulating the checklist. They are:
- The Payment of Wages Act, 1936
- The Industrial Disputes Act, 1946
- The Industrial Employment Standing Orders Act, 1946
- The Payment of Gratuity Act, 1972
- Inter-State Migrant Workmen (Regulation of Employment & conditions Of Service) Act, 1979
- The Child Labour (Prohibition & Regulation Act), 1986
- The Factories Act, 1948
- The Minimum Wages Act, 1948
- The Workmen’s Compensation Act, 1923
- The Trade Unions Act, 1926
- The Payment of Bonus Act, 1965
- The Employees Provident Fund & Miscellaneous Provisions Act, 1952
- The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
- The Contract Labour (Regulation & Abolition) Act, 1970
- The Employees’ State Insurance Act, 1948
Every HR manager is supposed to adhere to these regulations and laws, wherever they are applicable. Since an SME can be a small manufacturing unit, the majority of these regulations are applicable to it. HR Compliance for SMEs is critical because it is better to be compliant than facing issues later.
What are the legal risks?
Due to disruptions in the supply chain process, organizations may not be able to fulfill contracts. There may arrive a need for negotiation.
Due to CoVID-19 crisis, some organizations will have to face potential insolvency. It will happen due to impacted business performance.
Organizations may delay payments to their employees because of a lack of funds or logistics and infrastructural problems because of lockdown.
Organizations should remain compliant with regulations even if there is a crisis like Covid-19. If required, organizations may seek the help of Statutory Compliance.
Health and safety considerations
One of the important and essential aspects of the checklist is worker health and safety. According to the Factories Act, 1948, and the Mines Act 1952, there should be legal measures to protect the health and safety of people working in the company.
Managers are responsible for workspace safety in the corporate environment. They are supposed to look at every standard and regulation laid down by the respective state government and central government
For example, employees are not allowed to go to the office during the lockdown period. Even if the unlock process begins, people will not get a conveyance to come to the office.
Hence, it is imperative to change the work policy accordingly. Rules and regulations for work from home concept need to be updated in the document. HR compliance for small businesses is as important as it is in a large company.
What is the HR manager’s duty to maintaining core values and ethics?
When there is a crisis, core values and business ethics are at the forefront of the HR manager’s mind. After Covid-19 pandemic, HR must remind the employees about the same. Ethical behavior, integrity, and respect should not be compromised at any level.
HR is supposed to issue corporate messaging and remain consistent with the fundamental ethics and values of the business.
To ensure HR compliance, it is essential to keep the employees reminded about it. Also, it should be clarified that there is a zero-tolerance policy for any attempt to blame, isolate, or disparage any ethnicity as the reason for the current situation.
Instead, there has to be a feeling of ‘working together’ to overcome the difficult times. Everyone should be united and work wholeheartedly and focus on work only.
Every employee has to adhere to the code of conduct. In no situation, any employee should take the undue advantage of the crisis to provide benefit to him or the organization.
The biggest challenge is to build trust with employees. When people are asked to work from home, they have the fear of being neglected. They fear that the organization will not continue their services they are found unproductive or redundant.
‘Work from home’ puts challenges like maintaining a sense of teamwork. The feelings of anxiety, depression, or isolation may prevail. People might feel disconnected from others.
HR will have to work hard to ensure regulatory compliance along with ensuring the wellbeing of people. It may require redefining hr compliance in India.
Nobody had ever imagined a difficult situation like Covid-19. Since the crisis is unique, its consequences are also unique. Being an HR manager, one should take measures to keep compliance unaffected. In light of the new working policies, e.g. ‘work from home’, it becomes all the more necessary to pay attention to it.
If it is necessary, then the organization will have to look into the existing procedures and policies to make them compatible with the ‘new normal’ life. They should be adequate in this global crisis. Statutory Compliance Management is more relevant today.
Experts underline the fact that compliance is something that an organization should practice more than preaching. The more it emphasizes following the ethics by example, the more people will appreciate and follow.
Those who are struggling or need additional support should be provided. The role of HR becomes further crucial to maintain the Statutory Compliance for SMEs.