Why HR Compliance is more Important for SME’s

Why HR Compliance is more important for SME's

Why HR Compliance is more Important for SME’s

After a break in business activities due to Covid -19, the businesses are finally trying to get back on their feet. In the changed situation, there has been a lot of paradigm shift in the way to do business.

HR Compliance services play a major role in most businesses’ success, especially so for the SMEs. The small and medium enterprises sector consists of many sections such as manufacturing, infrastructure, food processing, packaging, chemicals and IT and it is estimated that around 40 percent of the Indian workforce are involved in it. Statutory Compliance in HR, therefore has a very strategic and an important part to play.

What is actually Statutory Compliance in HR? 

This is nothing, but when an organization gives any commitment to run their business in accordance with the rules set by the government of that particular land, then it is called as HR Compliance and it is absolutely necessary for the business to stay legal.

HR Compliance Services are generally third-party service providers who help the businesses to remain compliant. Many a time, the task is outsourced as this requires special skills and knowledge. Since the SMEs run on a very tight budget, it is absolutely necessary for them not to fall in any kind of legal traps and thereby losing a huge money on penalties. They can avoid such a situation by strictly adhering to the principles of Statutory Compliance in HR. The SMEs need to avoid compliance risk and get into a crisis.

What are the major risks faced by the SMEs at present?

Due to sudden disruptions because of Covid-19, there have been numerous breakdowns in the supply chain system, and the SMEs may not be in a position to fulfil their business contracts. In fact, many of the SMEs are actually facing potential insolvency at the moment, and many others are delaying payments to their employees because of lack of funds or logistics and infrastructural problems. SMEs should make the best use of HR compliance services to ensure the smooth running of their organizations as far as possible. (Read More: How Crucial is compliance for Startups)

Essential to maintain core values and ethics

When there is a huge crisis such as Covid-19, obviously maintaining Core Values and Ethics are at the forefront of the SMEs. It is important to make sure that Ethical Behaviour, integrity and respect should not be comprised under any circumstances. Every employee is expected to work unitedly to avert a crisis like situation. In a crisis situation, the biggest challenge is to build a certain level of trust. There may be challenges in working from home, such as maintaining a sense of teamwork. Very often there are feelings of depression, anxiety or isolation as people might feel disconnected from others. Here HR may need to ensure regulatory compliance along with the well-being of the employees. It may require redefining Payroll Compliance Services altogether.

Health and Safety issues must be addressed

According to factories act, 1948 and Mines act 1952, there should be proper measures in place to protect the health and safety of people working in the company. Managers are responsible for promoting workplace safety in the corporate environment. They are supposed to look at every standard that is laid down by the central and state governments. We can say that HR compliance is as important in a small company as in a large corporate.


With the advent of Covid-19 and a changed working situation, the SMEs will need to look at the existing procedures and policies and lay greater stress on HR compliance.

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