HR compliance refers to ensuring that a company’s policies and procedures are in line with legal requirements and ethical principles. This means adhering to laws, regulations, and industry standards that govern human resources practices.
It encompasses a wide range of areas, including employment rights, workplace safety, data protection, and anti-discrimination policies. The goal of HR compliance is to ensure that organizations operate within the legal framework, protect employee rights, and foster a safe and productive work environment.
Areas of HR compliance include:
Equal Employment Opportunity: Ensuring non-discrimination in hiring, promotion, compensation, and other employment practices.
Wage and Hour Laws: Complying with minimum wage, overtime, and child labor laws.
Safety and Health: Providing a safe and healthy work environment.
Employee Benefits: Ensuring compliance with benefits laws, such as health insurance.
Leave Laws: Adhering to laws related to family and medical leave, paid time off, and other leave entitlements.
Data Privacy: Protecting employee personal information.
Why is HR compliance important?
Compliance is critical for businesses operating in Malaysia as it helps mitigate risks, protect employee rights, and maintain a positive company reputation. Adhering to labour laws, workplace safety regulations, and employment standards not only safeguards your organisation from potential legal issues but also enhances employee satisfaction and productivity.
At ManpowerGroup Malaysia, we understand that navigating the complexities of compliance in the ever-evolving employment landscape can be challenging. Our compliance services are designed to help businesses like yours meet regulatory requirements while fostering a positive workplace environment.
One of the most pressing reasons for HR compliance in Malaysia is to prevent legal repercussions. Employers who fail to adhere to labour laws can face severe penalties. Non-compliance can result in fines, legal action, and significant financial losses for the company.
Case 1: Employer Fined RM30,000 for Safety Violations
In 2021, a Malaysian employer was fined RM30,000 for failing to ensure the safety of its employees. The company neglected to provide adequate safety measures, resulting in a workplace accident where an employee was injured by falling machinery. An investigation revealed that the employer had not conducted regular safety checks and failed to implement necessary safeguards, a clear violation of the Occupational Safety and Health Act 1994.
The employer was prosecuted and fined RM30,000 for this oversight. This case not only resulted in financial penalties but also negatively impacted the company's reputation and employee morale. It serves as a reminder that compliance with safety regulations is essential to avoid accidents, legal consequences, and damage to an organization’s public image.
Case 2: Employers were Fined a total of RM35,000 over Fatal Accidents at Work
In 2022, two companies in Sabah, Malaysia, were fined for failing to ensure proper workplace safety, leading to fatal accidents involving their workers. The first company was fined RM20,000 after an employee was crushed by machinery that was not properly maintained. The second company was fined RM15,000 following the death of a worker who fell from unsafe transportation at the workplace.
These incidents resulted in significant fines, tarnished reputations, and public outcry. The companies were also required to undergo extensive audits and implement stricter safety protocols. These cases highlighted the severe consequences of non-compliance with the Occupational Safety and Health Act, which mandates employers to provide safe working conditions for their employees.
The offence under Section 15(1) of the Occupational Safety and Health Act 1994 provides for a fine of up to RM50,000, or a jail term of up to two years, or both, upon conviction.
Challenges of ensuring HR compliance
In the post-COVID-19 era, where remote and hybrid work models are increasingly common, many businesses are employing international staff. This global workforce introduces unique HR compliance challenges in Malaysia.
Effectively managing a remote or hybrid team, especially when international employment is involved, requires a deep understanding of local labor laws, tax regulations, and compliance standards. Addressing the complexities of cross-border employment, including work permits and visa requirements, calls for a proactive and informed approach to HR compliance in Malaysia.
For instance, in Asia Pacific and Middle East, one commonality across most countries is that managers and directors of a company can be held criminally liable for violations of employment laws.
A quick snapshot gives an insight into the various regulations employers across the region have to take note of:
In Australia, legal entitlements to salary, leave, severance and other employment benefits vary depending upon which of approximately 100 different industry and occupation-specific awards applies.
When ensuring compliance, the devil is in the details. Even in countries such as Japan, Thailand, and Korea where there is a quota for employing disabled persons, the details significantly vary. In Malaysia, the Malaysian Employment Federation urges employers to hire Persons with Disabilities (PWD). In 2008, the Malaysian Government decided that the civil services must allocate 1% of the available jobs to people with disabilities.
How to ensure HR legal compliance
To ensure HR compliance, organisations can:
Identify relevant compliance obligations based on factors like location, industry, and business size.
Stay updated on legal changes by subscribing to industry newsletters or following relevant news sources.
Assign compliance responsibilities within the HR team, potentially hiring a dedicated compliance officer.
Create an HR compliance checklist to cover areas like recruiting, hiring, company policies, and employee handbooks.
Ensure consistent application of HR policies through clear procedures, documentation, and manager training.
Regularly audit HR policies to ensure compliance and update them as needed.
Apart from managing it internally, collaborating with local experts or partnering with HR service providers is one way of ensuring compliance with local laws and regulations.
Companies can mitigate compliance risks by leveraging on the expertise of HR service providers, like ManpowerGroup, for the following
Outsourcing of specific business operations or tasks
Staffing services
Payrolling services
Outplacement of excess employees
HR Compliance
Why choose ManpowerGroup
ManpowerGroup is a leading provider of workforce solutions, with over 75 years of experience and unmatched expertise in sourcing and managing talent.
Here's why we're the ideal partner:
Deep-rooted Expertise: Benefit from ManpowerGroup's decades of experience as a global leader in HR services.
Global Reach: Our extensive network ensures compliance with local labor laws worldwide.
Technology-Driven Approach: Leverage our advanced technology for efficient processes and data security.
Avoid Legal Penalties: Our expertise helps you proactively address compliance issues and minimize financial risks.
Foster a Positive Workplace: Compliant HR practices improve employee morale and satisfaction.
Strengthen Your Reputation: Demonstrate your commitment to ethical business practices and attract top talent.
Ready to start? Contact us to learn how we can help you.
ManpowerGroup in Asia
By partnering with ManpowerGroup, you can help your business mitigate common risks of non-compliance in Asia related to:
Compensation
Employment Contract
Workplace
Not paying employee salaries on time
Not making required social welfare deductions for employees
Failure to pay statutory overtime
Liability for failing to withhold taxes
Deducting “fees” or other amounts from employee wages
Compliance to pay parity
Failure to properly notify employees that their employment has been terminated
Unlawful termination of employment
Co-employment risks
Unauthorized loss, use or disclosure of employee personal data
Allowing/causing workers to exceed maximum statutory overtime hours
Poorly-handled employee complaints
ManpowerGroup, with a strong presence across the Asia-Pacific and Middle East, including Singapore, Malaysia, Thailand, Vietnam, India, Japan, and Australia, offers deep expertise in HR compliance, local laws, and regulations. The following table showcases some examples of employers' obligations and possible penalties that come with violating them in various countries within the region.
Countries and the nature of the violation of employer obligation
Country
On-time payment of wages
Payment of statutory costs
Payment of withholding taxes
Lawful Termination
Discrimination & Forced Labor
Vietnam
Fines
Administrative & Criminal fine
Negative impact on company reputation and business operations
Administrative & Criminal fine
Negative impact on company reputation and business operations
Fines and compensation payable to employee
Fines and/or imprisonment
Leadership will be held responsible
Philippines
Fines and imprisonment
Fines and/or imprisonment
Surcharge for late payment
Administrative penalties
Criminal Penalties
Compensation payable to employee
Fines and/or imprisonment
Thailand
Fines and/or imprisonment
Fines and/or imprisonment
Compensation plus interest
Criminal fine per default
Compensation payable to employee
Fines or imprisonment
Country
On-time payment of wages
Payment of statutory costs
Payment of withholding taxes
Lawful Termination
Discrimination & Forced Labor
Australia
Penalty + damages to employee
Penalty on amount due
Penalty + damages to employee
Penalty + damages to employee
Penalty + damages to employee
India
Fines or imprisonment
Fines or imprisonment or both.
Interest payable per month or day
Fines and/or compensation payable to employee
Fines or Imprisonment
Korea
Imprisonment or fines + interest on wages
Administrative penalties
Administrative penalties
Compensation payable to employee
Imprisonment or penal fine.
Fines and/or imprisonment
Singapore
Fines and imprisonment
Fines and/or imprisonment
Fines
Defaulting on fines can result in imprisonment
Compensation payable to employee
Fines and/or imprisonment and caning
Contact Manpower today for a free consultation and discover how our customized solutions can help your business thrive in the region and globally.
