The beginning of a year provides a great opportunity to conduct an HR audit. New laws and regulations often take effect on New Year’s Day. While companies may have some time to update their documentation, policies and procedures, you’ll need to be compliant with legislation or risk being fined.
Your HR team can carry it out on its own or, preferably, work with the internal QA team or an external consultant to obtain objective results. Working with a checklist and predefined evaluation criteria, the findings from the HR audit offer unbiased results. You have the chance to identify the strong policies, processes, procedures and, more importantly, the areas in need for improvement. Simultaneously, it lets you step back and review how closely your strategy is reflected in your operational work.
As you prepare for the audit, define which areas you want to check. Examples can include:
- Personnel files: Is the electronic or hard copy personnel file complete? Do you have all required visa and work permit documentation? Do you have all contracts signed by all parties and filed? Have performance evaluations and any related documents, e.g. warning letters, been recorded and filed?
- HR policies: Are your policies in line with the latest changes in labour law, immigration law, data privacy law or civil law? Do any of your policies stand in contraction to each other? Have all policies been written and, as a next step, been communicated to the employees?
- HR procedures: Are your procedures in line with your policies? Do the written procedures reflect the actual execution of them?
- Payments: Working together with your Payroll team or provider, have salaries, allowances, bonuses and commissions been paid by the required dates and as per the applicable plans? Do the number of overtime hours match the hours worked as per the time keeping records? Has overtime been calculated in accordance with the legal requirements and internal premiums?
HR audits need to be carefully planned and the auditors require the appropriate training to define the current state. Due to the time requirements, it may only be conducted at one point once a year. Some companies prefer to audit throughout the year, focusing on one particular area in each month (e.g. HR policies in January, salary payments in February and so on), thus keeping the impact on the daily operations low.
Once the findings have been gathered and analysed, you can identify any gaps and prioritise the corrective actions, if and as needed. The most important actions are to correct violations of the law and health and safety. These two areas can attract financial fines as well as imprisonment. Address HR inefficiencies and implement best practices once a solid foundation has been put in place for your HR team. This may mean (re-)training your team on getting the job done right the first time by understanding the required steps in the process, leveraging technology and applying their strengths.
Are you concerned that your HR operations may no longer be compliant with the labour law? Don’t have the time to create an HR audit from scratch? Call us on +971-50-5516322 and find out how we can support you to reduce risks of being fined while increasing your HR team’s efficiency.