HR Software

HR compliance: an introduction & audit checklist

Colleague Using Hr Compliance Software

Updated 14/12/2023


For small, medium and growing businesses, HR compliance can get overlooked. If your company doesn’t have a HR manager, the responsibility of compliance sits with the business owner or another employee. That’s huge pressure - especially if you have wider responsibilities. 

To overcome the issue of HR compliance, many SMBs outsource their HR or utilise HR software. This can ensure your employment and work practices reflect existing laws and regulations. External support also removes the need to carry out repetitive tasks. Such tasks often lead to mistakes and non-compliance. 

In this article, we’ll cover the basics of HR compliance. We’ll also share an audit checklist. You can use this to determine whether you’re following good practice. It may also help you decide whether HR software (or any other form of external support) is right for your business. 

What is HR compliance?

HR compliance is the process of ensuring that workplace policies and procedures are aligned with legal and regulatory requirements. It also takes a proactive role in maintaining compliance in the workplace. 

In this context, HR compliance plays a crucial role in adhering to these regulations. The United Kingdom’s law is based on case law and employment legislation. The two sources form the rights and obligations of employees, employers and trade unions. 

This comprehensive set of employment laws aims to oversee the employer-employee relationship, ensuring fairness, safeguarding workers' rights, and fostering a healthy work environment. 

Some of the important employment laws in the UK include:

  • The Employment Rights Act 1996 mandates that employers provide employees with a written statement of terms and conditions within two months of starting employment. This document outlines key employment terms, including job duties, pay, and working hours.
  • The National Minimum Wage Act 1998 establishes the minimum hourly wage rates for different age groups. The rates are regularly reviewed and updated to reflect changing economic conditions.
  • The National Minimum Wage Act 1998 establishes the minimum hourly wage rates for different age groups. The rates are regularly reviewed and updated to reflect changing economic conditions.
  • The Equality Act 2010 prohibits discrimination, harassment, and victimisation on the grounds of protected characteristics, including age, disability, gender, race, religion, and sexual orientation.
  • The Health and Safety at Work Act 1974 requires employers to ensure the health, safety, and welfare of their employees. This includes conducting risk assessments, providing training, and maintaining a safe working environment.
  • The General Data Protection Regulation (GDPR) regulates the processing of personal data. Employers must comply with data protection principles when handling employee information.
  • The Trade Union and Labour Relations (Consolidation) Act 1992 regulates the rights and responsibilities of trade unions and facilitates collective bargaining between employers and employees.
  • The Pensions Act 2008 (first act in 1995)  introduced automatic enrolment into workplace pension schemes to encourage retirement savings. Employers must enrol employees and contribute to their pensions.

These legislations and acts highlight the critical aspects that HR departments in the UK must adhere to to remain compliant, ensuring that the employer-employee relationship's lawful and fair.

What are the types of HR compliance?

There are many types of compliance, we’ll go into a few examples below:

Statutory compliance

This involves enforcing and following government legislation related to employment and the workplace.

Examples of statutory compliance include:

  • Conforming to minimum wage regulations.
  • Observing working age prerequisites.
  • Enforcing anti-discrimination policies.

Regulatory compliance

Regulatory compliance necessitates the adherence to rules established by specific regulatory bodies, distinct from general government legislation.

What categories of regulatory compliance are there?

  • Government bodies - Health & Safety Executive (HSE) 
  • General Data Protection Regulation (GDPR)

Contractual compliance

Contractual compliance involves conforming to regulations and terms stipulated in contracts, whether with partner organisations or employees.

Key factors covered in contractual compliance are:

  • Adhering to terms of service agreements.
  • Complying with conditions outlined in employment contracts.

Union Law compliance

Union law compliance is pertinent for companies dealing with unionised workers, such as The Trade Union, Unions UK and Workers Union.

Common UK HR compliance concerns

HR compliance issues come in a myriad of ways. It can be a factor in the size of the organisation, the industry they work in and employee behaviour.

GDPR and Data Privacy

Mishandling sensitive employee data or failing to comply with the General Data Protection Regulation (GDPR) can result in extreme penalties and mistrust between the company and its employees.

Unfair dismissals

These occur when termination lacks justifiable reasons or due process, leading to legal action against the employer. Common mistakes include inadequate disciplinary procedures, discriminatory firings, and disregarding established dismissal protocols. Emphasising fair procedures, valid documentation, and compliance with employment laws helps mitigate risks.


Another common concern is unlawful discrimination. This can be based on age, gender, or ethnicity, and is not only immoral but also illegal.

Learn more about unfair treatment at work.

Working hours violations

Exceeding the maximum permitted weekly working hours (48 hours on average) or neglecting to provide adequate breaks can lead to lawsuits and other legal actions.

Why is HR compliance important?

Human Resources (HR) compliance is of paramount importance for several reasons, as it serves to protect both employees and organisations. Here are key reasons why HR compliance is crucial:

Legal adherence

Compliance with employment laws and regulations helps organisations steer clear of legal repercussions. Your organisation can be subject to an external audit at any point in time. Not complying with laws and regulations can lead to fines, penalties, and legal disputes that may damage the organisation's reputation and financial stability.

Maintaining company reputation

Adhering to ethical and legal standards in employment practices demonstrates the organiszation's commitment to fairness, transparency, and employee well-being. A positive reputation, built on a foundation of HR compliance, not only attracts top talent but also fosters trust among clients, partners, and the broader community.

Conversely, instances of non-compliance or unethical behaviour can lead to reputational damage, potentially impacting customer loyalty, investor confidence, and overall brand perception.

Protecting employee rights

Compliance ensures that employees' rights are upheld. This includes rights related to fair wages, working conditions, privacy, and protection from discrimination, contributing to a workplace where employees feel valued and respected.

Mitigating risks

Compliance measures act as risk mitigation strategies. By adhering to regulations, organisations minimise the risk of legal actions, workplace accidents, and other liabilities that could harm the business.

Creating a positive workplace culture

Compliance contributes to the development of a positive workplace culture by fostering ethical behaviour and fair treatment. This, in turn, can lead to increased employee engagement and satisfaction.

Who is responsible for HR compliance?

The responsibility of HR compliance differs from business to business. Larger companies will have a dedicated HR team. They will be responsible for understanding compliance laws, and their job is to communicate them to managers and employees.  

For small to medium-sized businesses, the responsibility can be complex. It usually sits with the business owner or another employee. Sometimes, the role of the HR manager is outsourced (via software or an external agency). This relieves the pressure of compliance on existing staff members.  

HR compliance is a big undertaking, no matter how big or small your organisation is. It should be handled (or supported) by an experienced professional, either internally or externally.

How compliance and HR software go hand in hand

HR compliance software can serve as a powerful tool for mitigating compliance risks within your company. It acts as the central repository for your people's data.

5 ways HR software can help with compliance:

  1. Protect your business from potential dispute - Having robust HR policies and procedures in place will protect your business from disputes and claims. Part of this involves making sure your documentation is always accessible. HR compliance software with an online document management module allows you to easily record employee consent on company policies. It also ensures you keep a definitive record of HR-related documentation.    
  2. Keep your people's data safe and secure for GDPR compliance - HR software helps to keep sensitive employee information secure. Password protected, it is only accessible to those granted access. This is helpful for GDPR and data security compliance.    
  3. Maintain accurate information - Keeping data accurate and up to date is crucial. This can be difficult if data is spread across multiple systems. As a centralised, cloud-based solution, HR software makes it easy to maintain accurate information. Employee HR self-service software also allows employees to update their details. 
  4. Health and safety compliance - HR compliance software with health and safety capabilities can help you accurately record health and safety incidences digitally.
  5. Manage risk and compliance with staff training - HR software can also facilitate the training of staff. Many platforms have a built-in learning management functionality that ensures employees are trained adequately. Bear in mind LMS systems are often found in HR software catered to larger businesses. SMBs may not require this level of functionality.

Poor compliance is a big disadvantage of not using HR software, and if you would like to learn more about disadvantages, you can read our recent article – 5 disadvantages of old HR software and systems.

HR compliance audit checklist

Conducting an HR audit checklist can bring with it many advantages. Most notably, you get a broad oversight of the inner workings of your SMB. An HR audit will often reveal whether HR is fulfilling its daily functions. 

In knowing the inner workings of your company, you can detect potential complications or areas of improvement.

What is an HR compliance audit checklist?

HR Compliance Checklist UK 

To help you determine what areas you need to create policies on to remain compliant, we've compiled a HR compliance checklist of topics: 

  • Overall company guidelines 
  • Policies relating to: 
  • Security procedures 
  • End of contract 
  • Health and safety 
  • An employee handbook 
  • Training for line managers 
  • Company-specific policies

Ensuring compliance in HR: What steps can you take?

In the dynamic landscape of human resources, ensuring compliance is a legal obligation that contributes to the overall success and sustainability of an organisation. 

Navigating the intricacies of HR compliance involves a multifaceted approach that encompasses various aspects of employment laws, ethical practices, and industry regulations. 

We have included 10 steps to ensure your organisation can effectively ensure HR compliance:

1. Stay informed and updated

Regularly monitor changes in employment laws and regulations. Subscribe to industry publications, attend seminars, and engage with legal professionals to stay up-to-date on the latest developments.

2. Conduct regular HR compliance audits

Perform comprehensive audits of HR policies, procedures, and documentation. Identify areas of non-compliance and promptly address any issues discovered.

3. Establish clear policies and procedures

Develop and communicate clear and comprehensive HR policies. Ensure that employees are aware of these policies and provide regular training sessions to reinforce understanding. One way that this can be done is through an employee handbook which should include:

  • Workplace safety
  • Code of conduct 
  • Ways of working 
  • Working hours 
  • Disciplinary action in the workplace

4. Implement technology solutions

Utilise HR software and technology to streamline compliance processes. Automation can help in tracking employee data, managing documentation, and generating compliance reports.

5. Create a compliance culture

Foster a culture that prioritises compliance and ethical behaviour. Encourage open communication, making it easy for employees to report concerns or seek clarification on compliance matters.

6. Provide ongoing training

Conduct regular training sessions for HR professionals, managers, and employees. Cover topics such as anti-discrimination, data protection, and health and safety to ensure everyone understands their responsibilities.

7. Divide compliance responsibility among the HR department

Your HR department must know the ins and outs of compliance, and compliance regulations that apply to the company widely. It can be a rather strenuous task, so to organise your time, consider the following: Is this a shared responsibility among the team or do you appoint one person who will manage this? 

Depending on the size of your business and needs you may need an HR team, manager or consultant to maintain accurate and up-to-date records of employee information, contracts, and compliance-related activities.

8. Monitor global compliance

For organisations with international operations, monitor and adhere to compliance requirements in each location. Ensure a consistent approach to HR compliance across all regions of operation.

9. Benchmark against industry standards

Regularly benchmark HR practices against industry standards and best practices. Identify areas where the organisation can improve and adopt industry-leading compliance measures.

10. Swiftly respond to non-compliance

Develop a protocol for addressing non-compliance issues promptly. Investigate complaints or violations thoroughly and take appropriate corrective action.

Ensuring compliance in HR is a continuous and multifaceted effort that requires commitment, vigilance, and a proactive approach. By staying informed, fostering a compliance culture, and implementing robust policies and procedures, organisations can navigate the complexities of HR compliance successfully, contributing to a positive workplace environment and long-term organisational success.

Unsure if you’re staying compliant?

Of course, carrying out an audit on your HR compliance will require you to look at all aspects of Human Resource management. This includes:

  • All company policies 
  • Recruitment 
  • Compensation and employee benefits 
  • Employee relations 
  • Safety, wellbeing and worker’s compensation 
  • Record keeping and documentation

As an SMB, ensuring you remain compliant across the entire HR function can be a huge undertaking. That’s why it is not uncommon for SMBs to outsource responsibilities. Outsourcing HR to an external agency can relieve you of the stress and burden of HR compliance. However, it does come at a cost. A more cost-effective alternative is to utilise HR software. This provides you with full oversight of your HR, whilst ensuring you stay in -line with legislation.  

When searching for the best HR compliance software for your business, ensure you read providers’ respective compliance policy pages to see how each provider deals with compliance. If you are interested in how Access PeopleHR can help you remain compliant, try our free trial today.

Rich Newsome
By Rich Newsome Digital Content Writer

Rich is a content writer at Access PeopleHR and has a wealth of experience within the tech space, including HR software. Passionate about providing website visitors with informative and easy-to-understand content, Rich is committed to helping SMBs find the best solutions for their needs. With a flair for writing, Rich's content engages and educates readers, guiding them towards informed decisions.