Best Practices in HR

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Gabby Baglino
  May 22, 2021

10 Most Important Workplace Compliance Laws to Know for Avoiding Lawsuits

Managing employees strategically within an organization is the responsibility of HR professionals in compliance with the laws governing employee rights and employer obligations. In the event that an organization violates these constantly changing and complex regulations, it introduces itself to a range of risks, including lawsuits, financial losses, and reputational damage.

As a result of the potential severity of non-compliance, there is a big demand for HR professionals who can handle common employment issues and legal workplace issues.

Human resources professionals with legal backgrounds have another competitive advantage at work, as they have the ability to prevent legal threats before they arise. These specialists help companies stay in compliance with current laws and their practical applications, protecting employee rights while also preventing unnecessary claims.

1. Compliance With HR Law

HR legal compliance protects the employee and the employer, and it’s the duty of companies to follow the rules that govern the workplace environment. Your employees must have legal authorization to work in your country. For example, although citizens of the European Union, the European Economic Area, and Switzerland may reside and work in EU countries without a work visa, nationals of third countries must obtain a work permit. The European Union’s member countries set their own immigration requirements based on their particular labor needs. Unlike the “Schengen visa” that covers multiple European countries, there is no existing “Schengen work visa.”

2. Workplace Confidentiality

Human resources professionals should always keep confidentiality in mind when performing their duties. Similar to HIPAA compliance policies that protect confidentiality in the medical field, HR professionals must also follow the rules that govern confidentiality for all information they handle in the workplace. It is possible to encounter lawsuits, identity theft, and other serious issues due to failing to keep certain information confidential. It is important to maintain confidentiality in the following areas:

  • Files involving employees
  • Terminations
  • Absences
  • Compensation
  • Performance reviews
  • Hiring documents
  • Expansions
  • Restructuring
  • Layoffs

3. Benefits

HR managers must ensure all employees receive compensation and benefits in line with the law. For instance, it has been a founding principle of the European Union since 1957 that female and male workers should be paid equally for the same work or work of equal value. An EU Directive from 2006 ensures that employers must provide equal pay to women and men for work of equal value. “Pay” encompasses not only basic salaries but also complementary benefits, provided by the employer, whether in cash or in kind.

4. Discrimination

Discrimination in banned in the workplace in much of the developed world. The Civil Rights Act of 1964 made it illegal for companies in the U.S. to discriminate based on race, religion, color, sex, or national origi. By 2000, legislation forbidding discrimination was added to EU laws protecting women and men. Employees and prospective employees have a basic right to fair treatment.

Among the areas covered by these laws is equal treatment when applying for a job, the protection of pregnant women and breastfeeding mothers, as well as rights to maternity leaves and parental leave.

5. Harassment

Legal protection against harassment is also essential in human resources. It is essential for organizations to have anti-harassment policies that foster an atmosphere of dignity, decency, and respect in the workplace. New and existing employees must have access to these policies. All managers should also receive training to improve their ability to spot potential cases of intimidation and harassment, as well as fair, impartial, and thorough investigations in case an employee files a claim.

6. Safety

All aspects of the work environment must be safe and healthy for employees. They must evaluate all risks and put preventative, protective measures in place to prevent their employees from being exposed to them, such as making sure they have received the necessary safety training and information.

There might be times when employers need to take additional measures, such as training workers on first aid, firefighting, and evacuation procedures. Risk assessments are not addressed in EU regulations, but national regulations may define specific content and form requirements for conducting risk assessments in some countries.

7. Rights of Workers

Employees across many developed countries are protected by employment law. Most EU employment laws, however, operate differently in member states since the majority of these laws are created at the EU level and are then transformed into national law by each member state. Many large companies have in-house HR professionals and legal counsel to help them stay updated on their compliance status and any changes to the laws. For smaller businesses, maintaining these types of professionals on the payroll can be a challenge, but a breach of the law is still a breach whether you’re a small business or a large corporation. Since labor and employment regulations are relatively easy to violate, it’s essential that you stay vigilant in this area.

8. Employment/Jobs Contracts

A company’s terms of employment should be provided to new employees in writing when they hire staff. Ideally, employees should be given their employment terms in advance of starting work. The terms of employment for new employees are usually provided by companies between one and two months after the beginning of the company’s working relationship.

It is mandatory that the staff contract or equivalent written statement providing evidence of working conditions include at least the following and/or refer to relevant law:

  • Employer and employee parties to the employment contract
  • If the employee will not work at a fixed location, be sure to mention it and tell where your business is registered.
  • A job description/brief description of tasks, a title, grade, or group of work
  • Date of commencement
  • If the contract is temporary, how long will the job last?
  • The number of days of paid holidays per year
  • If you and the employee decide to end the contract, how long of notice you should give each other
  • Elements of compensation, such as basic pay, should also be considered
  • Workday or workweek length

9. Conflict Resolution

Conflicts in the workplace occur everywhere, and ignoring them can cost the company a great deal of money. The company loses countless hours of productivity and profitability each time a conflict is not resolved. The European Union has developed a legal framework for mediation and conflict resolution, specifically Directive 2008/52/EC, to make mediation more visible as an effective means of resolving disputes.

The alternative dispute resolution model was a hit in the 1980s when experts and executives touted it as an excellent way to keep corporations out of court and away from litigation that damages both winners and losers almost equally.

But ADR failed to live up to expectations. Despite many companies that have adopted alternative dispute resolution, damage awards, legal bills, and lawsuits continue to increase in the United States. The study also found that ADR — particularly court-annexed arbitration — did not reduce costs or delays, but in fact led to increases in both.

10. Wrongful Termination

Employers are liable for wrongful termination when they fire an employee for illegal or unauthorized reasons. Despite the absence of European-level legislation protecting employees from unfair dismissal, most employees have some level of protection. The result is that employers need to adhere to a fair procedure and provide a reason for dismissal.

In accordance with EU Charter of Fundamental Rights Article 30 – Protection in the event of unfair dismissal, workers have the right to ask for an explanation in advance and to be given a reasonable period of notice. If they are unfairly terminated, they have the right to an effective and impartial dispute resolution process and sufficient compensation in case of unfair dismissal.

How to Protect Your Company From Lawsuits

While there is no way to completely ensure that there are no breaches of workplace compliance laws, there are steps you can take to strengthen your company’s policies and reduce the possibility of illegal actions. 

Prioritize Documentation

The paper trail is essential in the event of an employee’s misconduct at work. In cases of progressive discipline, it’s critical to keep track of every step. Having done so will allow for the clear determination of the steps taken to correct a situation in case of litigation. Similarly, employee performance evaluations should also be documented.

Train Managers to Avoid Workplace Litigation

An important use of the HR budget can be training managers in human resources. Employee rights, company policies, and HR best practices should be explained to managers. In addition to monitoring employees for potential harassment issues, HR management can also serve as the best line of defense. It’s possible to diffuse a situation with the proper skills before it escalates.

Establish a Whistleblowing System

Legal violations cannot be reported and reputational harm avoided simply by creating a whistleblower policy. It is important for HR professionals to focus on building a robust and effective whistleblowing system. Whistleblowing should be encouraged without fear of workplace retaliation through an appropriate workplace culture that favors contextual factors and successes.