HR compliance is the process of ensuring your business policies and practices align with the applicable employment laws. Compliance covers issues such as developing and documenting HR policies, enforcing those policies, and ensuring continuous alignment with evolving labour regulations. An HR audit is one of the most critical tasks that HR departments in any company need to undertake. This is because non-compliance can have negative effects on your business, such as heavy fines, costly lawsuits, and reputational damage. 

Read this article to find out the main types of HR compliance points for your hotel/restaurant, discover when to conduct HR audits, benefits and how to prepare for them. The icing on the cake is a downloadable 9-step checklist to help you prepare for your hotel’s HR compliance audit. Let’s dive in!

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Types of HR Compliance

Here are some HR compliance focal points for hospitality businesses:

  • Statutory compliance: This refers to the legal requirements that a business must comply with depending on where it operates. Statutory compliance can entail paying a certain minimum wage, complying with anti-discrimination laws, or adhering to legal working hours. For instance, in Spain, employers are required to pay a minimum wage of €7.82 per hour or €1,000 per month for a full-time job.[1]
  • Regulatory compliance: Different countries have unique regulations governing different sectors, including hospitality and tourism. Regulatory compliance entails complying with specific rules established by these regulatory bodies. For instance, UK health and safety regulations require hotel sector staff to have first aid training and know-how in deploying first aid kits.[2]
  • Contractual compliance: Parties to a contract are required to meet their part of the bargain, failing which there could be civil suits against the offending party. In an employment contract, for instance, an employer may be required to pay certain benefits, while an employee may be required to give a notice period to the employer before departing.
  • Data compliance: Regulations governing how businesses handle employee and customer data are becoming commonplace. Data or technological compliance involves complying with rules on how private data is acquired, stored, processed, and retired. Travel and leisure businesses in EU member states such as France, Spain, and Italy are governed by the General Data Protection Regulation (GDPR).[3]


What Is an HR Audit?

An HR audit is a periodic review of HR processes in order to identify areas for improvement. An audit enables a company to determine if its processes promote or impede organisational goals. HR auditing can be used by businesses to maintain compliance, and link HR processes with strategic priorities to ensure they actually improve organisational performance. 

Conducting HR audits provides you with an opportunity to tighten the loose ends in areas such as regulatory compliance, employee recruitment, onboarding, retention, and compensation. Some common types of HR audits include:

  • Compliance: A compliance HR audit reviews how a business is adhering to applicable laws and regulations, such as labour laws, data privacy laws, or health and safety regulations.
  • Best practices: Businesses undertake the best practices audit to assess how they are measuring up with the trailblazers in the industry. This audit helps companies enhance or maintain their competitive advantage.
  • Strategic: A strategic HR audit seeks to review an organisation's HR practices and determine whether they align with its strategic plan.
  • Function-specific: This audit focuses on a particular component of the HR function, such as recruitment, onboarding, training, or performance management.

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Who Should Conduct the HR Audit for Your Hotel Business?

If they have the skills and time, internal HR practitioners can conduct a human resource audit. When taking this option, it's essential to develop a project checklist and evaluate the skill set, time, and resources required for this activity. It's also critical to obtain buy-in from key company stakeholders to guarantee support when implementing audit findings.

You can also look outside the business and hire external auditors. This can be necessitated by a lack of in-house expertise or if other routine responsibilities are overstretching your HR people. A key advantage of external auditors is that they bring objectivity to the process, which can reduce or eliminate tensions between HR and other departments.

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When Should You Conduct the HR Audit?

While there are no hard rules as to when you should conduct an HR audit, it's advisable to adopt a proactive approach. As a general rule, the best time to perform an audit largely depends on your business’ plans and schedule. 

For instance, a hotel industry audit can be more suitable during slower seasons or at the start of the year to enable tracking of performance year over year. You can also undertake an HR audit following a significant development such as a takeover, merger, or change of management. 

Whichever the period, a full-scale audit is an expensive undertaking, which means doing it more than once per year may not be feasible. Instead, you can use mini-audits or annual check-ups to keep tabs on issues.

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The Benefits of Conducting HR Audits

HR audits are not mandatory in most jurisdictions. However, this doesn't mean sweeping this activity under the carpet. Here are the key benefits of HR audits for your hospitality venture:

  • Audits help improve your business processes, empower your staff, and make them feel valued.
  • Regular audits help travel and leisure businesses stay compliant with employment laws and sectoral regulations.
  • HR audits help hotel/restaurant owners and managers leverage audit data to align HR policies with organisational objectives.
  • Effective HR auditing can reveal hiring bottlenecks, enhance the candidate experience, and improve the employer brand.
  • HR audits can help hospitality businesses eliminate systemic redundancies that bog down HR and organisational health.


Preparing for an HR Audit

When gearing up for an HR audit, it's always important to do your homework well in advance. Proper preparation through self-auditing allows you to identify lagging areas before anyone else. Moreover, being ready for an audit makes unannounced visits by regulators less anxious. 

Here are three tips to prepare for this audit:

  • Draw a checklist: Prepare a checklist of audit focus areas to enable you to stay organised, save time, and make it easier to plan for subsequent audits. 
  • Keep track of documents: For every item on your checklist, identify and maintain the relevant documents in an easy-to-access format, such as digital files.
  • Ensure certifications are updated: The status of employee certifications can be a potential headache during audits. Track and ensure employee professional certifications are up-to-date.

Ready to carry out your hotel’s HR compliance audit in 2023? 

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