Recent years have seen the role of the HR professional evolve. Job descriptions have expanded, remits changed and priorities shifted.
But despite these changes, compliance with legislation has maintained a steadfast presence on any HR professional’s radar. With stricter legislation coming in, impacting employees and the businesses alike, it falls to the HR team to ensure adherence to the ever-moving targets.
Are you prepared?
At GBG we recently undertook some research asking HR professionals their thoughts on legislation changes. Startlingly, 41% are struggling to keep up with changes that directly impact their employees and organisations.
Changes to UK law, such as those made to the Right To Work in the Immigration Act and Modern Day Slavery Act are met with anxiety by a third of respondents. Only 26% feel prepared, and just 4% feel optimistic that the changes will be advantageous for their organisation. However, despite nearly half of HR professionals not feeling prepared to handle legislation changes, a majority (62%) believe it’s their primary responsibility.
Legislation changes are evidentially making HR professionals feel unprepared. We still don’t know what the full impact of Brexit will be, which will add further complexity to the situation.
HR professionals may have to report on the nationalities of every member of the workforce, and manage multiple country legislation requirements to ensure compliance. The Home Office is now targeting larger organisations with adherence audits and issuing civil penalties for employing someone without the right to work in the UK.
The consequences post-Brexit should only reinforce what businesses should already be doing and highlight why the need to know your people is critical more so now, than ever before.
Many respondents to our survey (41%) cited employment screening as their number one priority. However, when asked how often they ran employee checks, less than one in five (17%) ran multiple checks throughout the year. A fifth of respondents said they didn’t undertake any checking throughout the year, with 11% only running checks when an incident triggered the process.
The changing landscape around employment screening, legislation and an organisation’s requirements to monitor employees more stringently is becoming increasingly difficult to keep up with. However, the consequences of not doing so opens a business up to employee fraud and reputational risk. Businesses need to recognise the importance of not just completing checks at the point a candidate joins an organisation but also throughout their employment.
Last year saw employee fraud account for 32% of all reported cases of fraud in the UK, costing businesses more than £46m in the first half of 2015. Reports suggest that the true cost is much higher. Payroll fraud alone is estimated to be in the region of £12bn in the private sector. This includes falsifying expenses, setting up salary payments to ghost employees and making false wage claims. The most common types of payroll fraud include the straight diversion of cash into bank accounts via cheques or online payment systems.
When asked how often they ran employee checks, less than one in five ran multiple checks throughout the year.
Every business is susceptible to this activity and it’s happening quite regularly without businesses even knowing it. Organisations need to be aware of the risks and have robust processes in place to manage the threat of insider fraud.
As well as direct costs, a number of high-profile cases of employee fraud making the headlines have had a massive impact on brand and reputation. Earlier this year, a council officer was jailed for five years for giving tenancies to fraudsters claiming to be homeless. At least 20 bogus applications were approved, costing Southwark Council £2.4 million.
What this tells us is that the ongoing checking of staff to determine their honesty, integrity and financial soundness is not only critical to an organisation’s adherence to regulation, but also imperative to the security of a business’ IP and bottom line.
Staying one step ahead
So what can HR professionals do to ensure they feel in control of the changing legislative environment?
Primarily it’s about setting the right tone throughout the organisation. Legislation dictates that HR managers should be aware of any employee whose nationality is from outside the European Economic Area (EEA), the type of visa they are working under and when it is due to expire.
Organisations, notably in the retail sector, that find fraud and theft is an ongoing problem detrimental to their business have established in-house security teams to identify, investigate and, if necessary, prosecute fraudsters. For others, a less enforcement-type approach is sufficient. Managers, with day-to-day contact with staff, should be encouraged to notify the HR team of employees getting into personal difficulties that are starting to impact their work life.
Organisations should also provide their HR department with the tools to schedule frequent checks on existing staff and to identify the early indicators of external stress which could be the motivating factor for an employee to commit fraud. Such checks may include annual driving licence checks, adverse financial, criminal record, sanctions, media and social media checks.
With the applicant’s consent, such checks can be processed on a regular basis. And the statistics give us good reason for doing so. Over 1 million people are three points away from losing their licence, over 900,000 County Court Judgements (CCJs) are issued per annum and one in four of the adult population in Britain has a criminal record of some kind.
Of primary importance is that organisations don’t leave their existing employees unchecked throughout their employment. We live in changing and challenging times, and it is a HR department’s responsibility to know their people.