What is Compliance and Why Should You Care?

Compliance is sometimes seen as a business buzzword that doesn’t have a lot of meaning, but that is far from the case. In fact, this interpretation often comes about because many people don’t quite understand what it means. 

In reality, compliance is something that almost any employee will come across in their day-to-day role at work. It’s a word that covers just about any and all of the regulations that you have to follow while you’re at work because of the industry you’re in, whether you’re an employer or employee.

In this article, we dive into more detail explaining what compliance means, share some common examples in different industries, and discuss why it’s such an important topic.

What is Compliance?

Compliance shouldn’t be confused with just any workplace rules. As an employer, you may set your employees certain rules that they have to comply with, or if you're an employee, you’ll no doubt have rules that you have to follow. But these aren’t what’s generally considered compliance (although there are exceptions which we’ll cover in a second).

Compliance in the context we’re talking about is almost always used to mean the practice of following regulations that the authorities have set. These authorities may well be the government, regulatory bodies, or industry organisations.

Just about any business will have regulations that they have to follow, from basic health and safety laws to industry-specific standards.

In practice, there are two elements to compliance:

• The compliance with externally set rules and regulations
• Complying with policies that have been put in place to adhere to those external rules and regulations

In many cases, large organisations will have a compliance department. This is particularly common in the financial services industry for instance where there are a lot of regulations set out by the FCA, the government and even the EU. 

It’s the job of the compliance department to make sure the entire organisation is compliant. In smaller companies, there might be a compliance officer or the role will be spread throughout a variety of people.

What is a Compliance Officer?

A compliance officer is an employee who is in charge of ensuring that a business is compliant with all relevant regulations and industry standards. They’ll be in charge of staying up to date with compliance expectations, overseeing the necessary procedures to ensure compliance, and dealing with any compliance issues or queries.

What are the Consequences of Non-Compliance?

Failure to comply with regulations can mean very different things in different situations and industries. If your business is part of an accredited body for instance, and they fail a compliance test, then this might mean that they are no longer accredited. This can be damaging, but not necessarily catastrophic.

On the other hand, failure to comply with life-or-death regulations such as those covering fire safety could mean criminal prosecution, if not significant fines. If we take GDPR for example, fines for non-compliance can be tens of millions of euros.

Ultimately, the regulations that compliance has to deal with are generally about keeping people and money safe, and the punishments for not doing so can be harsh accordingly. You might not want to care about compliance, but it is often essential, no matter what level you’re at in the business.

Types of Compliance in the Workplace

As previously mentioned, compliance in the workplace can be very common indeed. Here are a few of the main areas in which you may have already thought about compliance, even if you didn’t know you were.

What Is Regulatory Compliance?

Regulatory compliance is a general term used to describe how a business complies with industry regulations. This involves having to take a variety of actions, such as providing training, handling data in a certain way and keeping records which demonstrate that internal processes have been working.

Regulatory compliance is specific to certain industries, such as particular standards for things like medical devices or security requirements for employees working with children or vulnerable adults. Common examples include COSHH, fire safety requirements and waste management regulations.

What Is Statutory Compliance?

Whilst regulatory compliance in business refers to regulations that are specific to certain industries, statutory compliance refers to the legal requirements that businesses must adhere to. Almost every business is impacted by statutory compliance legislation, which covers topics like data protection, health and safety and employment law.

When it comes to how to ensure compliance in the workplace with statutory requirements, many of these will be the responsibility of the employer or the company's HR department. But in the case of things like health and safety, employees may also have responsibilities under legislation that ensures compliance, so it’s important that everyone understands their responsibilities and the consequences of neglecting these.

What Is GDPR Compliance?

Compliance teams up and down the country will be very familiar with GDPR and all the things you have to do to comply with the Data Protection Act. This piece of EU legislation is applicable to almost every business and impacts how you handle and store personal data.

In order to comply with GDPR, businesses are required to ensure that they give certain rights to people whose data they store, including the right to withdraw their data and the right to request the data that an organisation has about them. Ensuring compliance with these requirements involves implementing a range of procedures, and failing to comply can have very serious consequences.

For more information about GDPR compliance, take a look at our online course on The Essentials of Data Protection (GDPR).

What Is Health and Safety Compliance?

Health and safety is probably the most common workplace compliance consideration. Under general workplace legislation, employers have a responsibility to keep their employees safe at work and this involves providing relevant health and safety training that is updated and reinforced.

Company compliance with health and safety regulations involves making sure you’re following any government guidelines on things like having a first aid kit in the office or trained first aider onsite. This is an area where the importance of compliance is quite serious, as not only do you risk legal consequences if you fail to keep your workplace safe, but you also risk the safety of your employees.

If you’re looking for resources to help ensure that your workplace is health and safety compliant, take a look at our range of online health and safety training courses.

What Is Financial Compliance?

Financial compliance is not only applicable to companies in the financial sector, although they will have a lot more regulations to comply with. For the majority of businesses, adhering to financial compliance processes will involve following steps to prevent money laundering, keep customer data safe and ensure that appropriate business practices are followed.

For more information about ensuring financial compliance in the workplace, our online ‘Anti Money Laundering’ training course is a useful resource.

How to Ensure Compliance in the Workplace

Understanding what compliance is and why it’s important is only the first stage. Once you understand what is required, you need to take action to ensure that your workplace is compliant with relevant legislation and industry regulations. Here’s the best process to follow.

Implement Compliant Policies

The best way to ensure compliance is to bake the necessary actions into your company policies. Policy informs almost everything that happens in a business, so if you’ve outlined expectations and requirements which ensure compliance right at the top, it will be much easier for everything else to happen in line with these.

Monitor Procedure Effectiveness

Once you’ve identified what needs to be done to achieve company compliance, you’ll have to establish procedures that make this happen as part of your official policy. The next step to ensuring compliance is to monitor how these procedures are rolled out and how effective they are, looking at employee engagement and measuring the amount of issues that arise as a result of failed procedures.

This is an important step in maintaining compliance instead of just ticking boxes at the start. By monitoring the effectiveness of your efforts to be compliant, you’ll catch any issues early and keep standards high.

Keep Detailed Records

The final key step in ensuring compliance in the workplace is to keep detailed records of what you’re doing. This acts as evidence if you’re required to prove your compliance and can also be useful in circumstances where your business compliance might be questioned, as you’ll have records of what you’ve been doing and the impact that this has had.

FAQs

What is a compliance audit?

A compliance audit is an assessment that is completed to make sure that a business is complying with all of the relevant legislation and expectations. It can be done independently to assess compliance or by a compliance officer to measure their organisation’s success, looking at the internal procedures and processes as well as official policies that the company follows.

What is legal compliance?

Legal compliance is the process of a company adhering to legislative requirements that are relevant to their industry sector. It’s a term that is sometimes used interchangeably with regulatory compliance, but generally refers to business compliance that is mandated by law.

How do you demonstrate compliance?

Demonstrating compliance involves being able to provide evidence that you’re following the expected processes and procedures that ensure your business is compliant with certain rules and regulations. This may involve keeping records of the action you’re taking or just being able to explain the procedures you’ve implemented and show the impact they’ve had.

Summary

Compliance is something that everyone needs to care about, no matter your position in a business. The consequences of non-compliance are severe, so compliance is important for all employees and employers to engage with to protect themselves and the business they work for.

An impactful way to ensure compliance and spread awareness of key regulations and expectations is through training courses. To find out more about compliance in the workplace, including details on how you can get training to make sure that you’re compliant with some of the most common UK-wide and industry-specific regulations and laws, take a look at our collection of online business compliance training courses.