are you confident your workforce practices are compliant?

December 10, 2014

in an increasingly complex regulatory environment, have the right framework and resources in place to ensure complete risk mitigation

Talent acquisition leaders face many mandates today: procure critical skills to drive business growth; keep labor costs in check even as competition for talent heats up; and improve process efficiency and transparency. However, one mandate is increasingly top of mind – comply with all relevant labor regulations and internal code of conduct. Despite its importance, it may be surprising to know that many employers lack the framework, regulatory knowledge, and resources needed to remain compliant in all the places they conduct business.

It’s an understandable challenge. Labor laws around the world are highly dynamic and constantly changing. There is no shortage of pressing regulations, regardless of geography. For instance, the Dutch Work and Security Act of 2014 significantly alters how many successive contracts an employer may award a temporary worker. In the US, the Affordable Care Act (Obamacare) has led many employers to scramble to meet its healthcare requirements. In India, newly elected prime minister Narendra Modi has announced a series of labor reforms aimed at attracting business investment. These countries are just some of many re-examining their labor laws.

Beyond national authorities, a host of other legal entities have their own regulations to which employers must adhere. Local regulations can be most vexing as it requires companies to dedicate resources on so many levels. For instance, many US states have recently enacted pro-labor legislation aimed at preventing worker abuse, misclassification of employees, and discrimination. At the other end of the spectrum, international treaties such as those in the EU governing data privacy or UN sanctions on trade with certain countries also require employers to pay attention.

the burden of keeping up
For organizations operating in multiple countries and under multiple jurisdictions, staying current with regulations can be a heavy burden. First, there are the legal resources required to understand and interpret these mandates. Market knowledge is also necessary if an organization wants to navigate difficult situations. For instance, some countries require businesses to obtain special licenses to hire employees, while others may require foreign entities to operate jointly with a local partner. In some circumstances, the use of third parties is a better option because of regulatory requirements and cultural practices. And, in rare circumstances, employers must know when to abandon or drastically alter their business plans because local customs require the payment of a bribe in exchange for government approval.

Even when employers have resources to guide them, they may lack the framework to be compliant. Especially in complex organizations, ownership of workforce compliance may be unclear or decentralized. This can lead to a lack of oversight and inconsistent adherence to both regulations and internal controls. A good example is the risks associated with using independent contractors, in which hiring managers often unknowingly manage them as if they were employees. This has the potential for misclassification actions that could result in penalties and back taxes.

So how can employers rest assured knowing their workforce management remains on the right side of the law in every place they operate?

follow core principles
As a global leader in the talent market, Randstad operates in 39 countries and supports clients in many more. We often hear their concerns regarding rules covering bribery and corruption, export control sanctions, data privacy, and worker protection. The best advice is to always understand the risks and, when in doubt, follow their core principles. There are no shortcuts when it come matters of compliance. The best answer sometimes is to take the long way around – devising solutions that require more legwork on everyone’s part but in the end mitigate the most risk.

As an RPO and MSP service provider, we deliver programs that help clients acquire the best talent in the most compliant manner. We do this by leveraging our deep understanding of local markets and regulations. Often employers seek our advice because our global public affairs footprint and legal resources span across so many markets, offering the insight their own infrastructure may lack. In some instances, what we tell them isn’t what they want to hear, but it’s what they need to know. Abiding by our core principles and those of our clients can be challenging at times, but it assures a mutually beneficial outcome and a long-term, sustainable partnership. 

Operating in today’s increasingly complex regulatory environment can pose tremendous risk for any employer, but working with a knowledgeable partner that understands the global and local regulatory environment can significantly mitigate much of that risk, which frees the employer to focus on its most important task: building the best workforce to drive business outcomes.

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