Talk to me, please! Supporting the human resources function

Internal Auditor, June, 1997 by Leah Miller

"The Personnel Director has so many issues to manage, non-compliance is sometimes discovered after an employee's lawyers become involved," says Paul Ohana, President of Panel France in Neuilly Sur Seine. "If internal auditors worked with the human resources department to help assess personnel issues and risks from the beginning, they could prevent many significant losses."

In recent interviews, internal auditors and HR professionals identified a few of the varied and complex issues facing HR functions worldwide. Internal auditors who learn to speak the language of the human resources function may be able to provide invaluable support and insight to their organizations.

Employee Contracts

In New Zealand, all employees have contracts with their employers, either individually or collectively. The expiration of a fixed-term contract does not guarantee or justify termination of the contract or the employee. Several extenuating circumstances must be met before a legitimate termination can occur.

"In addition, even though New Zealand law doesn't require financial compensation for termination, the courts recently declared that termination without compensation rafts to meet the test of procedural fairness, unless compensation is specifically eliminated by the employee's contract," says Fay Sowerby, Director of Human Resources at KPMG in Auckland, New Zealand.

Severance Pay

Israeli Labor Law obligates an employer to provide severance pay to all dismissed employees; to employees who have voluntarily retired upon reaching retirement age; and to the relatives of deceased employees who died during the period of employment. Nissim Mizrahi, Corporate Internal Auditor for Scitex Corporation in Herzliya B, Israel, says "The only exceptions include dismissal due to a criminal offense by the employee or if the employee caused serious damage to the organization. As long as the employee is awarded the correct severance pay, the employer has no obligation to reveal the reason for termination."

Employee Consultation

New Zealand courts have determined that the Employment Contracts Act requires employers to consult fully with employees when considering actions that will adversely impact them. There have been substantial awards when consultation, which should be at least three meetings for a duration of two days to two weeks, has been inadequate. Thus, advises Sowerby, it is wise to regard terminations as "potential" until employees have been fully consulted.

According to Ohana, similar directives will be implemented throughout the European community. "One such directive requires firms or corporations to open a social dialogue with personnel representatives and unions before making any important social decisions," he states. "These directives, which were considered as formal declarations of intent, recently received dramatic validation from the French courts."

Health and Safety

"Compliance with New Zealand's 1992 Health and Safety Act is vital and extremely difficult," says Michael Cox, Chief Internal Auditor for Television New Zealand in Auckland. "It seems there is no limit to the expectations of the courts that all health and safety issues are manageable, even though it is nearly impossible to identify where the next tragedy will occur."

"Among the trends in this area," adds Sowerby, "are compensation for victims; prosecution of individuals including directors and managers; higher fines; more prosecutions for occupational overuse syndrome (OOS); and developing case law in the area of work stress."

Electronic Work

In 1995, privacy lawsuits relating to e-mail and the Internet were the second fastest growing source of litigation for employers. "However, only 36 percent of organizations with e-mail capabilities have policies that address proper usage," says Barry Lawrence, spokesperson for the Society for Human Resources Management (SHRM) in Alexandria, Virginia. In addition, while technological advancements have enabled employees to telecommute, take work home, and work flexible hours, nobody knows how this will affect things like performance reviews or workers' compensation. "How does one evaluate an employee who isn't in the office 100 percent of the time? What happens if an employee trips over a rug in his home office and breaks his leg - can he file for workers' compensation? We don't have all the answers, yet," Lawrence states.

Global Environment

The new global community has altered the make-up of both an organization's customers and personnel. According to Lawrence, companies want their workforce to reflect their global customer base. "However, this can cause problems. If a diverse workforce isn't managed correctly, stress levels and workplace violence can escalate," he says. "Another issue is the low success rate of expatriate employees. Typically, the human resources department will be extremely diligent in making the expatriate comfortable in his new country, but forget the accompanying spouse. Therefore, the arrangement fails. We see that again and again."