It’s too easy to forget about gaps in a process until it’s too late. Employment contract weren’t signed or are missing. Annual leave is not recorded. An employee left but their visa hasn’t been cancelled. Beneficiary for life insurance have been left blank or not updated. Don’t let your HR processes cause your organisation financial or reputational damage! Conduct an HR audit!
For many, however, the word audit brings back dreaded images. External auditors requiring explanations about the state of the organisation, while HR teams are already overworked. Using the summer to create your own internal HR audit, you can get ahead of the curve, identify any gaps and take corrective actions.
Unless already part of the regular business procedures, an HR audit would need to be drafted to evaluate the current state of organisation’s HR policies, processes and practices covering
- Recruiting and onboarding
- Learning and development
- Performance management
- Total rewards
- Employee relations
Discrepancies between policies, processes and practices can help your team can be become the basis for any enhancements. Any shortcomings can also be addressed and adjusted according to their requirement: compliance, best practice, strategy, operational execution.
The process for an HR audit generally follows these steps:
- Define the scope
- Draft the questionnaire
- Collect the data
- Identify any gaps
- Report the findings
- Take corrective actions
Draft the questionnaire
You can take a pre-defined audit checklist from the internet, create your personalised form or engage with an external consultancy.
Collect the data (legal requirements)
The UAE Labour Law Federal No. 8 of 1980 as amended provides you with the foundation for your HR audit. Any of your policies need to be aligned to it to be valid.
The law also defines in “Chapter III Employment Contracts, Records and Remuneration” what records a company must keep in a personnel file for each employee, if employing 5 or more:
- Showing the employee’s name, profession, age, nationality, place of residence, marital status, effective date of service, pay and whatever changes effected on the pay, penalties invoked against him, injuries and vocational diseases sustained by him, date of service termination and causes of that, and
- A card, divided into three parts, showing 1) annual leaves, 2) sick leaves and 3) other leaves.
As a company, you may need to review each personnel file and check all documents. Any missing documents need to be added, potentially requiring the employee to sign the document again. You can find more information keeping your personnel files up-to-date in our previous newsletter.
If employing 15 or more employees, companies need also to keep these registers:
- Register of wages, showing the dates for joining of service, and fixing the amount of daily, weekly or monthly pay, along with its benefits, or piece-meal pay, or the commission to each one of them, his working days, and the date for his final departure from work, and
- Register of work injuries, showing all work injuries accidents and vocational diseases sustained by the employees as soon as they’ve been brought to the knowledge of the company, and
- Regulations of the work, showing the daily working hours, weekly holiday, other holidays, necessary measures and precautions to be taken for avoiding work injuries, and fire hazards, which must be approved by the labour department and displayed visibly for anyone on company premises, and
- Penalties sheet, showing the penalties that may be invoked and citing the conditions and cases for putting them into operation
While the registers can be kept centrally, the owner may be outside of HR. For example, if Payroll belongs to Finance, they may keep the “register of wages” and given the inter-dependency, need to be part of the audit. The same would apply to any work injury documentation which may be kept by EHS and not HR.
An HR audit requires more than just a tick on a checklist. It will reveal any gaps between the current state and the law, benchmark and organisational strategy.
Report the findings
Once the audit has been collected and the gaps have been identified, the audit team should summaries its findings and present them to the overall HR leadership team or even the company’s management team. Together, questions as to why certain gaps exist need to be asked and answered.
Take corrective action
This may then create the list of corrective actions. Legal compliance is a must and recommendations for corrective action need to account for these first and foremost. The audit team may prioritise any other corrective actions by importance (high, medium, low) and/or impact (high, medium, low) before determining owners and timelines for these.
The audit findings and action plans need to be documented. This can be used as a continuous improvement activity, working towards becoming more effective, efficient and innovative HR.
While HR audits can be perceived as expensive due to the time and resource commitment required, it will be less than the financial and/or reputational damages suffered by unscheduled labour inspections or court cases.
Stay legally compliant. Review your current policies, procedures and practices, identify any gaps and create an action plan to be consistent and compliant. Contact us and find out how we can support you and your team in conducting.