The International Labor Organization (ILO) estimated that “nearly three million workers die every year due to work-related accidents and diseases, an increase of more than 5 percent compared to 2015.” Out of those three million, 330,000 are due to work accidents. This statistic partly explains the numerous local, state, and international laws set all around the world, but in APAC specifically, to protect the health, safety, and equity of workers.
While HR leaders must abide by these regulations in APAC at all times, frequent updates could make HR compliance a struggle. To make it easier, follow this comprehensive HR compliance checklist when setting your company guidelines to ensure compliance.
What is HR Compliance?
HR compliance is the adherence of your company to the relevant laws (including industry-specific ones) on a local, state, national, and international level. If your organization covers various geographical regions, there are more rules that you might have to account for.
To be compliant, your company policies must align with these regulations, including setup, enforcement, and ongoing alignment. This requirement plays into several HR roles, such as recruitment, working hours, and work environments.
Why is HR Compliance Important?
You may be curious about the significance of HR compliance for your business. The reason is simply: HR compliance can potentially save your company millions of dollars by preventing avoidable fines, penalties, settlements, and legal entanglements.
These regulations are established to safeguard employees, with compliance encompassing equitable compensation, workplace safety measures, and the prohibition of employee discrimination.
Challenges in APAC HR Compliance
Although it may seem overwhelming, dissecting the difficulties that HR leaders encounter in their pursuit of compliance in APAC will empower you to approach them proactively and prepare for them. Some of the common challenges that APAC HR leaders may face include:
Keeping Up With Changing Regulations
Many HR professionals may lack assurance in staying abreast of the constantly evolving laws and regulations across the APAC region.
For example, in Malaysia, significant amendments were implemented to the Employment Act 1955, as reported in the Asia-Pacific Employment Law Bulletin 2023, which took effect on January 1, 2023.
Meanwhile, in Australia, the recent reforms to labor and employment laws were initiated by the new federal labor Government in 2022. Additionally, China experienced alternations in its Covid policy after its reclassification from Class A to a Class B infectious disease.
As such, it is to no surprise that keeping up with changing regulations could be burdensome and overwhelming for HR leaders.
Navigating Statutory Requirements
Ensuring statutory compliance entails adhering to employment-related laws established by local, state, or federal governments. These regulations cover a broad spectrum, ranging from minimum wage requirements to protocols for reporting incidents of money laundering. To ensure compliance, it is essential to set workplace policies that align with these legislations and enforce them consistently.
For example, in Thailand, when employers terminate employees without justifiable cause, they are obligated to provide compensation including salaries up to the last working day, severance pay, payment in lieu of notice, and compensation for accrued but unused annual leave.
However, defining what constitutes “justifiable cause” varies across different jurisdictions, adding complexity to compliance efforts. For instance, subpar performance might not suffice as a valid cause for termination in some regions, necessitating careful consideration and adherence to the specific regulations applicable to your operating area.
Balancing Diverse Recruitment Strategies
To tap into the diverse talent pools across the APAC region, it is crucial to refine your hiring approach to accommodate various needs. This entails identifying the point where HR compliance aligns with the diverse cultural and business practices of each country, including local customs.
For instance, certain negotiation styles prevalent in the APAC region should be embraced while ensuring compliance with labor laws. This ensures that offers made are not below the minimum wage threshold.
Most Common APAC HR Compliance Issues
That being said, let’s delve into the prevalent HR compliance issues in the APAC region to help you steer clear of repeating these mistakes or rectify any that may have occurred.
Hiring Discrimination
It begins with your job advertisements! Many ads explicitly mention requirements related to a particular protected class, which is discriminatory. These include criteria such as:
- Race
- Sex
- Color
- Nationality
- Religion
- Disability
- Age
- Genetic information (like family medical histories).
Protected information should not influence the hiring process. It’s essential to utilize neutral language that neither specifies nor implies such preferences. Fortunately, there are online tools and readily available templates to assist with crafting inclusive job ads.
Wrongful Dismissals
Non-compliance in the form of terminating employees on unjustified grounds is an issue. Each country in the APAC region has regulations stipulating valid reasons for employment termination, including:
- Serious misconduct
- Neglect of duties
- Breach of contract or policies
- Diseases and injuries
- Incompetence
- Deliberate disobedience of lawful orders
- Fraud against employers
In comparison, personal feuds, race, gender, and religion are invalid reasons to terminate employment.
For instance, terminating a worker in the middle of a conflict can come with the risk of wrongful termination lawsuits. Not to mention, it can hurt the remaining employees’ trust in their managers. Other examples include termination of contract during leave. In Indonesia, this is prohibited unless employees were absent due to sickness for more than 12 months.
Maternity Discrimination
In an area rife with HR complexities, adherence to maternity guidelines is frequently compromised due to breaches or loopholes in maternity leave policy. A concerning phenomenon involves expectant mothers concealing their pregnancies at work out of fear of potential job loss.
In an online panel discussion, it was emphasized that Indonesia lacks cash benefit schemes for maternity leave. This situation has also led some employers to exhibit reluctance in hiring female employees of childbearing age due to the full liability they bear for such benefits.
Salaries Owed to Employees
Employees may experience delays in receiving their salaries, partial payments (resulting from unfair deductions), or even complete non-payment.
Lead India, a law firm, has pointed out that certain organizations exploit employees’ unfamiliarity with the extensive law safeguarding their rights in India. Despite the existence of numerous laws, some businesses may terminate contracts arbitrarily or even withhold salary payments, escaping accountability.
APAC HR Compliance Checklist
So, where should you start with HR compliance? Use this checklist as your roadmap, assisting you in maintaining a risk-free business and resilience against legal actions!
Recruitment and Hiring
In terms of recruitment, consider the model provided by Australia's Fair Work Act. It incorporates completing employment contracts, providing necessary training, and conducting HR compliance procedures. The main pillars of this act are:
- Workforce rights (such as making complaints, claiming benefits, working hours, unfair dismissal, and minimum employment standards)
- Discrimination
- Industrial activities (meaning that employees can be a member of an industrial association)
- Pressure to negotiate individual arrangements
Employee Records and Documentation
In Malaysia, onboarding involves completing employment contracts and maintaining HR compliance with the Employment Act. You should also refer to both the Personal Data Protection Act 2010 and the Companies Act 2016.
For the duration of employment and for seven years after, businesses are required to keep personal information and the employment contract. The duration differs across record types, such as leave records and payment details, so be sure to check relevant legislations that apply to your business to ensure compliance.
Wages and Benefits
When it comes to wages and benefits, the National Employment Standards (NES) sets the guidelines that Australian businesses must adhere to. It details the bare minimum terms and conditions of what you must provide to all employees in the national workplace relations system. The standards the NES governs are:
- Flexible working arrangements
- Offers and requests to convert from casual to permanent employment
- Maximum weekly hours
- Requests for flexible working
- Annual leave
- Parental leave and related entitlements
- Personal/carer's leave, compassionate leave, domestic violence, and family leave
- Long service leave
- Community service leave
- Public holidays
- Notice of termination and redundancy pay
- Superannuation contributions
- Fair Work Information Statement and Casual Employment Information Statement
Maternity and Paternity Leave
In Singapore, employees are eligible for a maternity leave of 16 weeks, with 8 weeks of Government-paid leave, in the case of:
- The child being a Singapore citizen
- Working under you for at least three continuous months before the birth (if the mother is employed).
- Giving you at least a week’s notice before the maternity leave and informing you as soon as possible of her delivery.
In the Philippines, employees get 105 days of maternity leave, fully paid, if they notify you of their pregnancies and the probable dates of childbirth. They can also extend the maternity leave by 30 days without pay.
Social Security Contributions
If you’re in Singapore, you should ensure that the mandatory contributions of employees reach the Central Provident Fund (CPF), a program that supports citizens with housing, healthcare, and retirement aid. Plus, you should ensure the contributions are the right amounts depending on employees’ ages and positions.
In Malaysia, you should comply with the Employees Provident Fund (EPF) conditions, a retirement savings fund. Contribution is mandatory for employees whose contract details are not covered by the First Schedule, Section 2, EPF Act 1991.
As for China, the social security system comprises five insurance types and a mandatory housing fund. You must make timely, monthly payments on behalf of your employees.
Read more:
Payroll Singapore Reference Guide: Everything You Need to Know
Your Guide to Malaysia Payroll
If you’re operating in Australia, you must comply with Work Health and Safety (WHS), also called Occupational Health and Safety (OH&S), to keep your workplace safe and avoid putting employees at risk.
These laws regulate the machinery and structures, their usages, handling, and storage, health monitoring, facility maintenance, and the resources needed for safety.
Termination and Offboarding
The Labor Standards Act (LSA) sets the working conditions standards necessary for your employees’ livelihood in South Korea, including termination and offboarding policies. We’re talking about justifiable grounds for contract termination, 30-day notice periods, and rules for mass termination.
Moving to Singapore, you can refer to the Employment Act. It obliges you to give the leave notice determined in the contract or pay in lieu. If unspecified, you can refer to the act to learn how long the duration needs to be, which can vary from one day to four weeks. Also, the legislation prohibits discrimination on employment termination.
Australia’s offboarding process involves ensuring HR compliance with Fair Work requirements, like the reason for dismissal and notice period. Employees must receive one to four weeks notice from you (depending on their tenure) and no notice is needed in cases of summary dismissals.
Data Protection and Privacy
Data protection codes are designed to prevent data breaches against the personal information of employees (like medical records). Some regulations that need to be accounted for when setting up your HR compliance include China’s Personal Information Protection Law (PIPL) or Malaysia’s Personal Data Protection Act (PDPA) for lawful and fair data processing.
Regular Compliance Audits
To ensure HR compliance, you should set a solid data governance plan that stores data for up to six years. This way, when your HR data is subjected to internal or external compliance audits, all the relevant information will be there, ensuring maximum compliance for your business.
Learn more: 8 Reasons Small Businesses Need an All-in-One HR Software
Guidelines for Better HR Compliance
While adhering to HR regulations is crucial for avoiding legal issues, it is even more fulfilling to prioritize compliance for the well-being of your employees. Make it your goal to enhance their working conditions, leading to increased job satisfaction and employee engagement.
Adding purpose into tasks that may seem mundane or bureaucratic motivates you to strive for excellence, achieving better HR compliance in the process. We understand that this might seem like additional effort, but a reliable HR software solution takes on the bulk of the workload, allowing you to focus on advancing your mission.
With Omni, you gain access to data-driven insights that empower informed decision-making, as well as seamless integrations that effortlessly connect with your existing employee favored systems, making your entire engagement process more efficient and modern.
Omni scales alongside your team so you can customize and leverage the system to meet your business exactly where you are—as well as where you’re going.
With a full suite of modules to support every aspect of your business, Omni’s platform offers an intuitive and fully customizable platform that integrates with your team’s favorite tools for a seamless and timely adoption.
If you’d like to learn more about how Omni’s all-in-one HR software automates the entire end-to-end employee lifecycle, saving People leaders from administrative tasks and increasing organizational innovation,
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