Achieving compliance has come across as a big challenge for organizations who believe in global connectivity of their businesses. Being non-compliant has caused major reputational damage and steep penalties along with other issues pertaining to employee dissatisfaction, and any growing company would not intend to face such repercussions.
Thus, to save you from one, this blog covers the major global HR compliance challenges and the ways to overcome them. Glance through.
What is Global HR Compliance?
Global HR compliance is nothing but the policies and practices that need to be adhered to in terms of local law and regulation standards followed in different countries. This terminology covers every service from hiring, on-boarding, leave policies, payroll, and benefits, to off boarding as well.
Since the local labor laws change constantly, it is of paramount importance that an organization is well-versed with this change. Global HR compliance helps in risk mitigation, maintain ethical standards, and establish a robust relationship with the employees by enhancing job satisfaction.
Global HR compliance can be majorly classified into 3 essential categories:
Statutory Compliance: Statutory compliance looks after the adherence to local labor and employment laws. It covers taxation, compensation, and benefits.
Regulatory Compliance: Regulatory compliance involves adherence to the regulatory bodies of a specific industry. It covers license sanctions, taxation, financial reporting, etc.
Contractual Compliance: Contractual compliance involves adherence to terms and conditions outlined by the employment contract.
Global HR Compliance Challenges and Solutions:
Challenges:
- Multifaceted compliance framework
Every country has well-defined rules and policies for their employees which may vary between different regions. Considering the recent updates many countries have allowed their employees to leverage a certain defined working hour, which may differ from others on an hourly basis. For example, Finland has set expected working hours between 44.8 to 37.1 hours which differs for France (43 to 35 hours.) Likewise, the working days, employee benefits and other policies may also differ which can turn out to be a big challenge for companies to achieve global compliance.
- Data Privacy and Protection
Let’s take the EU as an example, who imposes one of the toughest data privacy laws GDPR and is very particular about securing employees’ data. Employees’ personal and employment information must be maintained adhering to data retention periods, storage rules and consent protocols. Organizations who are exposed to data breaches under any carelessness can face serious repercussions including damaged image and hefty fines.
- Cross Border Payroll Management
When the organization has a global presence, one major concern that shows up is cross border payroll management. While every country has its own set of taxation rules, benefits, and policies, adhering to them is necessary. Ensuring employees are compensated in their home currencies, while offering them eligible benefits and keeping track of the payroll cycle for the respective country, needs to be precise and error free. Any mistake in payroll processing or may lead to employee dissatisfaction.
- Employment Classification
Misclassification of employees is another major concern. Many times, permanent employees face the issue of misclassification as independent contractors or vice versa. The mislabeling of roles is no less than a nightmare for both employee and employer and may lead to dire consequences. Countries like the UK and USA have very stern rules where employers must carefully evaluate work arrangements. As, if the employees are misclassified then the employer may have to pay the taxes again along with the fines which leads to the company’s bad reputation.
- Staying updated about legal Changes
Compliance landscape is vast and distinct. Many accommodating factors like labor laws, employment contracts, employee benefits, tax rules and filings are continuously updating which generates the need for the employer to be well-versed with the updates. Especially, when you are operating globally, even a small mistake can result in major consequences.
How to Overcome Them?
- Leverage Technology
Technology has enabled the world to have a systematic approach onto different aspects of business. For example, tracking attendance, leaves and working hours has been made easier with the HR tools. This can not only solve problems like payroll processing errors but help in tracking employee performance and enhance employee satisfaction.
Technological advancements have even saved employers from data breach concerns by solidifying the security systems with cloud computing.
- Establish Global HR Compliance Framework
Create a centralized compliance strategy for a seamless and consistent approach. Stay informed of the consistent economic shifts and new taxation rules and maintain a platform where any major shift or key insight is being posted and updated. Document it where necessary.
- Outsource Services
Outsourcing HR services can be a strategic move that can make your organization compliance ready. Global HR outsourcing can help you stay stress free and focus on your business goal. These service providers are well-versed with conditional updates in the global policies and hence, they function accordingly.
- Document the HR Policies
Documenting the HR policies can ease up the work for everyone. Have every new policy, employment law, health benefits, employee benefits, leave policies, onboarding, and other formalities documented in the form of eBooks, handbooks which are readily accessible for everyone.
- Provide Trainings and Development
Ensure regular training and development sessions for the HRs to achieve global HR compliance. Company must come up with training programs which can help the staff with understanding the laws and regulations, significance of compliance and ensure development.
Conclusion:
The global business landscape is quite demanding. Compliance wherein, plays a crucial role in building or damaging a company’s reputation. Considering the current scenario, companies often face global HR compliance challenges and find it difficult to overcome them swiftly and efficiently.
However, these challenges can be easily addressed with the relevant solutions. One of these solutions that tops the list is outsourcing HR services. Global business expansion experts like TopSource Worldwide who have expertise in the domain for more than 20 years helping organizations with seamless expansion in over 180 countries can assist. We provide a customer-centric approach, and with our tailored services and cost-effective solutions you can leave the compliance worries to us and focus on your core objective i.e., global growth. If you are looking for global expansion services, then consider contacting us today!
