HR Leaders – Don’t Let Recruitment Pressures Make You Neglect Top Compliance Issues

  • 12th, June 2018
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The Human Resources (HR) department of every organization is entrusted with the huge responsibility of improving the quality of its staff. The HR function is in constant battle mode, trying to hire the best talent in the industry within the budget available. Easier said than done as they face extreme challenges – both internal and external.

Internal Challenges

  1. Mapping the exact requirement
  2. Building the right job description
  3. Budget Constraints
  4. Unreasonable expectation from department heads
  5. Figuring the best option to advertise the vacancy

External challenges

  1. Finding the right candidates
  2. Extreme competition from peer organizations
  3. Budget constraints
  4. Long notice periods
  5. Time & money wasted due to finalized candidates not joining

Mind you, HR has to repeat this routine for every position and the job can become very taxing, especially with pressure from the top to quickly fill the open positions. What begins as a qualitative quest for the right candidate soon turns into a quantitative tussle to meet the quarterly recruitment numbers. In such situations, it is quite easy for HR leaders to get carried away and lose sight of their compliance responsibilities.

Compliance? Sorry, what has compliance got to do with this?

Well, just as recruitment needs to be handled with care, HR Compliance is another function that can make or break the image of any organization. It is a critical component of the larger compliance structure of the organization for the single most important reason – it deals with people.

The core principle of hiring will never change i.e. choosing the best person for the role. However, HR leaders must ensure they have the necessary checks and balances in place during and after the recruitment process. For example, just as using the right parameters for screening the candidate is essential, it is necessary to follow the legal guidelines for retaining talent and reducing attrition rates in organizations.

It is best to follow best practices where employee record keeping and wage management is concerned as non-adherence may lead to heavy legal sanctions and restrictive penalties. From a recruitment perspective, HR leaders have increasingly started to rely on background checks.

Unlike the US, India does not have specific laws for background checks. But it is becoming an important component of the hiring department. This is done through an external agency or internal reference checks. This is more critical for permanent roles than for contract or part time roles as this has a direct bearing on the payroll of the organization and a few other laws like minimum wages, bonus, etc, where applicable. Background checks may cover parameters like medical history, work in previous organizations, credit checks, etc. In the current day scenario, social media checks are a common and easy way to track the activities and social behavior of the candidate.

In many organizations, the HR department is also in charge of compensation and benefit programs. These departments need to be aware of legal compliance pertaining to the following areas as well.

  1. The Factories Act
  2. The Employees Provident Fund Act
  3. The Apprentices Act
  4. The Maternity Benefit Act
  5. The Workmen’s Compensation Act
  6. The Payment of Gratuity Act
  7. The Payment of Wages Act
  8. The Industrial Disputes Act
  9. State Wise Factories and Establishments (Holidays) Act
  10. The Payment of Bonus Act
  11. The Employees State Insurance Act
  12. Professional Tax
  13. Prevention of Sexual Harassment Act
  14. Child Labor Regulations

These are just a few laws that HR needs to be aware of but more importantly, they need to understand how this impacts their organization. Please note this is not the complete list but an attempt to suggest the most relevant ones. Emerging ones like those pertaining to retirement planning and income security have not been included. The best option for HR leaders and departments is to stay connected with human resource associations as well as trade associations in their specific verticals – this helps in keeping track of the latest debates and developments and taking prompt action.

Understand this:

“HR compliance is critical in ensuring thorough adherence of rules and regulations governing the MOST important asset of organizations – their employees”.

While HR leaders and their departments must strive to attract and retain the best talent, it is also necessary to draft the right policies and procedures and follow a code of conduct that does not spare errant behavior. The next step is to consistently communicate this to employees so that it gets engrained in the culture of the organization, with visible improvement in the attraction, retention and attrition metrics. That alone should be the success criteria for any HR leader.


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