Ever-changing employment regulations make HR compliance quite complex. You may have to revise your processes and employee handbook or complete documents – all of which takes time away from running your business. But no matter how busy you are, HR compliance needs to remain a priority, or you run the risk of penalties and litigation.
What is HR compliance?
HR compliance means adhering to all applicable labour and employment laws. The larger your organization and the more geographic regions you operate in, the more legal requirements you must comply with. In the face of this challenge, many employers rely on talent management, software, policy training and workflow-enabled processes to protect their business.
What laws do HR practitioners need to know?
The number of laws and regulations at both the provincial/territorial and local levels that HR must know to stay compliant is vast. Applicable workplace legislation may include laws* on:
- Employment / labour standards
- Occupational health and safety
- Human rights
- Pay Equity
* Note that employers in the federally-regulated sector must comply with applicable federal labour and employment laws in these areas such as the Canada Labour Code, the Pay Equity Act and the Employment Equity Act, among others.
Plus, there are common law considerations to consider in the workplace as well.
What is employee compliance?
Employee compliance is achieved when workers are familiar with all of the laws that govern their industry or job and know how to conduct business in an ethical manner. It often requires procedural training and encouragement to learn from mistakes. Simply punishing compliance failures causes fear and anxiety and may lead to workers covering up errors instead of reporting them.
What is the role of HR in compliance?
Because compliance takes an organization-wide effort, HR’s role is to create a culture of integrity. Businesses who do this well often have:
- Consistent employee communication and education
- Executive leaders who are champions of ethics and compliance
- Ways for employees to report unethical activity
- Policies that are applied fairly at every organizational level
HR compliance issues
From hire to termination or retire, HR compliance issues tend to arise throughout the course of the employee lifecycle. Some examples include:
Discriminatory job listings
Recruitment ads should avoid language that shows preference for a candidate based on protected information or characteristics. This may include, but is not limited to, race, colour, religion/creed, sex (including gender identity, sexual orientation and pregnancy), national origin, disability, genetic information or age. Even asking for “recent college graduates” may be considered discriminatory. Online tools are available that can help you write unbiased job descriptions or see if your company has templates that meet best practice guidelines.
Inappropriate interview questions
During an interview, avoid asking questions that reveal protected characteristics, pry into a candidate’s personal life or disclose affiliations unrelated to the role. Inquiring about any of these topics may not only offend a potential employee, but also can also expose you to employment discrimination lawsuits. Instead, ask questions that let candidates demonstrate their skills. And if a candidate does reveal a disability and makes a reasonable request for accommodation, you cannot refuse to hire them on this basis.
Employees and job candidates alike expect their personal information to be kept confidential. Save completed applications, resumes, and other paperwork in a secure location and never leave them lying around the office for others to see. All documentation should be stored appropriately, for a reasonable period, and accessible only by authorized individuals within your organization.
Because it can affect eligibility for minimum employment standards protections such as leaves and overtime wages, as well as tax payments, misclassifying a worker can sometimes result in steep penalties. To handle classifications properly, you must first distinguish employees from independent contractors.
Improper training or onboarding
Onboarding helps new hires get acquainted with your business operations and learn your policies and code of conduct. Employees who understand appropriate behaviours and how to report harassment and other incidents can help you meet your employer obligations of providing a safe and healthy workplace. It’s also sometimes beneficial to have new employees shadow their coworkers for the first few days so they know how to work safely and productively.
Inaccurate payroll and tax payments
Paying employees correctly and on time is essential to maintaining workforce morale and avoiding wage claims. You also need to calculate payroll taxes and file them with government agencies or risk being audited or fined. Using a payroll service to automate the calculations, tax deductions and payments can help improve accuracy and compliance and may save you time.
Non-compliant leave of absence policies and processes
Employee leaves can be challenging because you must balance complying with applicable leave laws and maintaining productivity. To retain talent and reduce employee turnover, ensure your policies and leave administration processes abide by all applicable legislation.
Unfair pay practices
All Canadian provinces and territories, including the federally-regulated sector, have legislation in place addressing gender pay inequality. And while you may fully intend to abide by these laws, gender pay gaps can develop over time due to recruitment, transfers and promotions. Running regular pay audits under the advice of your counsel can help prevent this scenario.
Mismanaged workers’ compensation
When job-site accidents happen, workers’ compensation claims must be filed as soon as possible. Insist that your employees report accidents immediately and instruct managers on the proper way to submit claims. You can further minimize your risk by knowing the accident trends in your industry and implementing safety programs to prevent avoidable injuries.
Employees may be disgruntled for any number of reasons, but cooler heads must prevail. Firing someone on the spot or in a moment of anger can put you in jeopardy for wrongful termination lawsuits. Mishandled exits also hurt the morale of the remaining employees. By regularly requesting and acting on feedback from your staff, you can address workplace issues before they result in a conflict or resignation.
Unpaid final wages
Most provinces have laws addressing when and how final wages must be paid. Some require you to issue a paycheque on the employee’s last day of work, so it’s important to check the regulations in your local area. You should also promptly update your records to prevent overpayment. A payroll system properly integrated with other HR tools can help ensure that employees only receive the wages and benefits they’re entitled to.
How to improve HR compliance
Learn how you can help avoid a compliance misstep at any stage of employment, whether you’re preparing to write a job ad or conduct an exit interview:
1. Document company policies
Organizational policies, whether they are documented online or in an employee handbook, can help keep everyone on the same page and make workforce management easier. Some of the topics you may want to cover include:
- Preferred time tracking methods
- Social media guidelines
- Procedures for filing complaints
- Antidiscrimination and harassment policies
- Sick leave
- Dress codes
- Pay schedules
Carefully consider your guidelines so you don’t write something that could be misunderstood or doesn’t reflect your business values. Official documentation should also be reviewed by legal counsel to ensure it adheres to all applicable laws.
2. Stay on top of regulations
Achieving company-wide compliance requires that you stay informed of new legislation and updates to existing laws that apply to your business. To maintain a firm grasp on the regulatory landscape:
- Read press releases published by legislators and subscribe to updates from the Employment and Social Development Canada, Provincial Employment Standards and other government agencies.
- Regularly audit your ability to comply with regulations and have an executive team member address any shortcomings quickly.
- Anticipate future changes by following discussions on government websites and journals.
- Network with other HR leaders and attend conferences where government regulators will be speaking.
- Consult an employment attorney for an external perspective on the compliance issues impacting your business.
3. Communicate with employees
Employee compliance starts with effective communication. Information on ethical behavior and best practices should be provided on a regular basis and made accessible to everyone in the organization. Messaging must be clearly understandable by a wide audience, not just HR professionals, and should empower employees to speak their minds if they spot suspicious activity. Executive leaders who have bought in on the importance of compliance and demonstrate it in their conduct every day helps improve the lasting impact of these communications.
4. Work with an HR Provider
Working with an HR provider might be an attractive option if you’re interested in spending more time on growing your business and less on compliance. For a successful transition:
- Involve key internal stakeholders and designate a leader to oversee the project.
- Identify how much support you require – HR help desk or administrative service organization (ASO)
- Educate HR partners on your business processes, culture and personnel needs.
- Inform all employees about the transition and who to contact for HR requests.
This guide is intended to be used as a starting point in analyzing HR compliance and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.