HR Compliance for SMEs During the Pandemic

July 6, 2020
HR Compliance for SMEs During the Pandemic

The CoVID-19 crisis has thrown businesses into disarray. Given that different locations have different regulations, HR managers have faced many challenges, including compliance. One of the ways HR managers have managed to deal with compliance-related issues is using HR compliance services.

Seven state governments and the Central Government of India have invoked powers and provisions under The Epidemics Act, 1897, in anticipation of issues that may arise because of lockdowns, if there are any in the future. E&Y reports that there will be over 150 compliance-related obligations as a result of the CoVID-19 lockdowns and that almost every major sector ranging from manufacturing to entertainment was affected. Sectors such as corporate governance and disclosures, workplace health and safety, employment, data privacy, supply chain, and working capital were also affected.

HR Compliance

HR compliance refers to the organization’s commitment to conduct business and treat employees by following a series of regulations as agreed upon by either a government body or a regulatory body. HR compliance services are third party organizations that enable organizations to stay compliant in terms of HR processes.

Compliance Checklist

A compliance checklist is a tool for managers to ensure that they follow protocols and cover any areas that may leave them liable to compliance risk. The compliance checklist takes into account various domains necessary for assessing compliance risk and is a useful tool, especially during a crisis. Having a statutory compliance checklist for HR can reduce the time and effort managers need to spend on compliance in an audit.

Elements of the HR Compliance Checklist

An HR compliance checklist considers elements of both regulatory and statutory compliance for the organization and employees. When considering statutory and legal compliance for HR checklist, managers must consider labour and taxation laws and regulations that are applicable to the organization, including:

  • The Workmen’s Compensation Act, 1923
  • The Trade Unions Act, 1926
  • The Payment of Wages Act, 1936
  • The Industrial Disputes Act, 1946
  • The Industrial Employment Standing Orders Act, 1946
  • The Factories Act, 1948
  • The Minimum Wages Act, 1948
  • The Employees’ State Insurance Act, 1948
  • The Employees Provident Fund & Miscellaneous Provisions Act, 1952
  • The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
  • The Payment of Bonus Act, 1965
  • The Contract Labour (Regulation & Abolition) Act, 1970
  • 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

Managers are required to adhere to the above regulations wherever applicable. Given that SMEs also happens to include small manufacturing units, many of these regulations will come into effect.

Worker Health and Safety

Worker health and safety is also a key component of the HR compliance checklist. The Factories Act, 1948, and Mines act, 1952, are legal measures for the protection of the health and safety of workers.

In the corporate workspaces, Managers will have to look at regulations or standards that have been stated by their respective national or state governments and the WHO. In cases where it may difficult owing to containment zones transportation difficulties, managers can check which roles require personnel at their workspaces and ensure that others can work from home.

Legal Risks

  • Organizations may be unable to fulfill contracts owing to supply chain disruptions and may have to renegotiate.
  • Many organizations will have to deal with potential insolvency due to the impact of the CoVID-19 crisis.
  • Payments to employees and workers may be delayed owing to insufficient funds or logistical issues caused by the lockdown.

To ensure that organizations remain compliant even in the face of crisis, HR compliance services can assist organizations in doing so.

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