An introduction to HR compliance

An introduction to HR compliance

13 July 2023

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As the owner of an SME, you have lots of things on your mind from your company finances, to keeping an eye on your competitors – never mind trying to ensure that your business grows and is successful! With that in mind, it’s no wonder that HR compliance is way down your list of priorities, and it might not even make it onto the list at all! Ignoring HR compliance though isn’t a good idea in the long run and the excuse that you didn’t know what you had to do won’t stretch very far, so it’s important to have at least a basic level of knowledge.

What is HR compliance?

When talking about HR compliance, things can get very technical, very quickly. However, there are three main types of HR compliance you should be aware of:

  • Statutory compliance – this is what the law says an employer has to do.
  • Regulatory compliance – this is when a regulatory body, for example the Health & Safety Executive, issue legal requirements with which employers must comply.
  • Contractual compliance – this relates to the legal binding employment contract between an employer and an employee or between an employer and another party.

Croner define HR compliance as follows, “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”.

Who has responsibility for HR compliance?

If you are the owner of an SME, then it’s vital that you either take responsibility for HR compliance yourself, you delegate responsibility to a suitably competent member of your team, or you outsource it to a third party HR consultancy provider. Whoever takes responsibility will need to dedicate regular time to ensuring your HR compliance is up to date. Employment law and associated compliance is dynamic and you need to keep on top of it otherwise it can quickly get the better of you.

How to stay HR compliant

Initially, it may be useful to conduct some form of HR audit to assess the current state of HR compliance within your business. You could do this yourself by using an audit checklist or you could engage an external HR provider to carry out the audit and then present their findings to you. That way, you can then either work with them to plug any gaps, or at least use the report yourself to ensure that areas of weakness where improvements are needed, or where compliance is non-existent, can be addressed internally by you and your team.

HR compliance checklists will vary to some extent, but they should all include some key aspects of what your business needs to do in order to meets its obligations. Your checklist should cover employee contracts which include all statutory terms and conditions, as well as policies and procedures for essential day to day HR tasks such as absence management, annual leave and handling disciplinary and grievance issues.

Having those documents in place and up to date is fundamental to getting HR compliance right. You also need to ensure that you are following the law on things like working time regulations, paying staff the minimum wage and documentation records such as evidence that your employees have the right to work in the UK.

Getting those things wrong or neglecting them completely, can lead to legal proceedings, large fines and substantial reputational damage for your business. As mentioned previously, you also need to make sure that you are compliant with health and safety regulations and depending on the nature of your business, there could be a significant risks that need to be assessed and documented.

HR Software & HR Compliance

An effective HR software system, like HRX, can be a fantastic investment for your business as you strive for HR compliance. HR software systems are invaluable as they are able to save a range of documents all in one place. That ensures that staff have access to your policies and procedures at the click of a button.

Staff records can also be kept compliant with checklists so when you have a new starter to add and they provide evidence of their right to work in the UK, the document can be uploaded to their record and the box ticked to say that check is complete. If the check isn’t complete, then by using the system to run a report you can easily see where the gaps in your compliance for that area are.

Part of HR compliance involves making sure that your business fulfils its obligations in terms of data protection and GDPR. A HR software system will be password protected and possibly even have two factor authentication and that meets the requirement under GDPR to keep data secure. Another key principle of GDPR is that the data held by an employer about its employees is accurate. HR software which uses employee self-service is a great way to ensure accuracy as staff have access to their own data and if anything changes, then they simply log in and update the relevant information.

HR software will also assist with HR compliance by storing information on sickness absence, accidents at work and training records. The information stored in the system can then be reported on and compliance can be kept up to date.

See how HRX can help with your HR compliance

Among the many benefits of HRX can provide, it will provide your business with an extremely useful tool to support your HR compliance and in turn take away a number of your headaches. Find out more about how HRX can help you by signing up for a FREE 30 day trial or contact our friendly team today.


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