Benefits and Risk Management

To Act or React? – That is the question

Managing HR risks Managing HR risks can be difficult business. One reason might be because it’s hard for employers to forecast the linkage between corporate inaction and financial consequences. Either the elapsed time in between is too long or positive outcomes are not as obvious. This seems to be the case for workplace compliance.

Take employment systems review (Employment Equity) for example. Very few leaders would disagree with the intent of the legislation. It’s just difficult to see how you address business challenges through proportional representation. So, the end result is that many organizations will tackle Employment Equity obligations only when directed.

Similarly, very few leaders would endorse a position of unequal pay for work of similar relative value or paying jobs deemed to be of lesser value at a higher rate of pay. However, it’s difficult to quantify Pay Equity risks given the range of allowable approaches and practices (e.g. proportional value methodology, use of negotiated rates, definition of establishment). So, again, organizations might adopt a “catch me if you can” response and manage compliance risk only when directed.

Looking Forward

Managing other forms of HR risk and associated costs can be relatively straight forward provided you have the right HR metrics in place.

Costs associated with employee-centric benefits like termination and severance pay can easily be derived and therefore managed and mitigated. The current requirement under law with respect to termination, assuming a minimum employment threshold, is one week per year of service to a maximum of eight weeks, setting aside any additional amounts that may result from a common law action. A general rule regarding severance payouts, assuming employer and employee minimum requirements, is one week for year of service up to 26 weeks.

The baseline employer costs associated with these Employment Standards provisions should be reviewed and monitored annually. So in addition to having a better sense of the cost of providing insurance benefits to employees an employer can also have a better sense of accrued benefits owing to employees if terminated.

Have a Plan

Employers should align their HR policy manual update with their Benefits renewal schedule. This will ensure it currently reflects Employment Standards criteria across all HR programs – especially provisions specific to terminations and addressing long term disability benefits coverage.

Do you have a complete picture of benefits costs including those mandated through Employment Standards legislation? If not, then you may be managing your compliance risk in reactive mode.  Insufficient consideration can lead to significant future costs.

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By Dave Nanderam, Managing Partner, ASSOCIUM Consultants. Through our collaborative approaches, innovative HR products and customized advisory solutions we impact four leadership priorities: managing risk, driving productivity, strengthening talent capabilities and supporting your bottom line. Let’s connect to find out how ASSOCIUM Consultants can help your organization.