Workforce Compliance: Learnings from the Royal Commission

The upshot – and impact – of Kenneth Hayne’s findings from the Royal Commission into the Banking & Financial Services sector, continues to reverberate across Australia’s corporate and political landscape. Both during and since the Commission’s final recommendations were laid out, many scalps were taken, at the most senior levels in Australia’s banking community. It was a (metaphorical?) bloodbath.

We watched the findings come to light over the past months, with great interest. The key message we kept coming back to was a dire need for Australia’s corporate community to step up their compliance function. And often not just ‘step up’; but perhaps radically reinvent. Or even start from scratch. From what we’ve learnt there’s a breadth of compliance standards that exist in corporate Australia – not just in banking and financial services – but across most industries. Standards that we could rank from robust to plain shoddy.

In our business, working with some of Australia’s biggest employers, we are exposed to all manner of workforce compliance functions, and provide risk & compliance advice, for the primary purpose of adherence to workplace laws. This is specifically in relation to non-employee or contingent labour. And with an increasingly insatiable appetite for on-demand workers, there’s a direct and very real correlation to increased risk exposure for employers.

Yes, this need for and increasing utilisation of non-employee labour, brings complexity and nuance for organisations. There’s no ‘plug n play’ option here.

Firstly, workforce compliance is (or should be) a non-negotiable. But with most big organisations sourcing non-employee workers from a multitude of third parties (such online talent marketplaces, recruiters, contract talent agencies, even referrals) there’s frequently a misalignment between the host organisation’s compliance standards, and that of these third parties. Systems, processes, even basic checks and balances can vary greatly, which puts the host organisation in a heightened position of risk. It’s a compliance minefield.

Secondly, these same third parties can have a bigger cultural impact on organisations than what hiring managers, HRD’s or CPO’s might be aware. We’ve seen first hand, how a mindset shift can happen thanks to how one organisation’s culture can influence another. If the ethical or compliance culture of the supply company, isn’t up to standard of the host company, issues will invariably ensue. For example, non-employees treated like permanent labour, co-employment, little or no awareness of the relevant industrial relations laws.

The third issue we’ve noted – and keep in mind, none of these issues work in isolation – is, as mentioned earlier, the market’s ongoing desire to engage workers, on-demand. This workforce agility is starting to be the new-normal for organisations today, and from all recent evidence, it’s not abating any time soon. The cost savings and productivity gains of non-employee labour are very real; so too are the compliance risks. So the desire for more talent on-demand, is in effect, the enabler of potentially poor standards of workforce compliance. Hence the need for a strategic and robust approach and investment in workforce risk and compliance.

This week, Samantha Carrol of Ash St lawyers, said of the Hayne findings:

“Compliance systems, lack of compliance and in some cases, seemingly complete disregard for the law were a common theme throughout the [royal commission]…”

Royal Commission Final Report

What’s needed now is a greater focus on and investment in compliance (and in context, workforce compliance). You’ve got to wonder, how far reaching is non-compliance in business? And to what departmental functions does non-compliance typically extend? Granted, workplace and IR laws are complex and changeable. That being the case, isn’t it a greater justification for better systems to ensure non-employee talent are engaged, ‘by the book’? We think so.

In summary, corporate Australia will need to invest more in their workforce compliance functions. If we can learn anything from the Royal Commission’s findings, it’s that investment in compliance will be well founded. If your talent and workforce compliance house is in order, you’ll not run foul of the (often complex and changing) legislation around employees and non-employee workers.

What’s your view? Is your business up-to-scratch when it comes to IR compliance? Let us know in the comments…