Cross-Border Catch-Up: Building a Global HR Self-Audit Framework, Part 1

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Samantha Duncan: Welcome back to the Cross-Border Catch-Up, the podcast for global employers who want to stay in the know about cutting-edge employment issues worldwide. I’m Samantha Duncan, joined by my colleague, another member of Ogletree’s Cross-Border team, Lina Fernandez.

Today, we’re starting part one of a two-part podcast that will discuss the importance of checking in with local HR and running a thoughtful self-audit. In part one today, we’ll discuss best practices for developing a global self-audit that works across multiple jurisdictions. Then in part two, we discuss the importance of layering jurisdiction-specific addenda to get practical, on-the-ground clarity of a company’s operations. Throughout both podcasts, we’ll give some examples of questions HR teams may want to run down in countries like Mexico, Australia, and others to help avoid issues.

So Lina, a company is setting up a local entity in a new country, or maybe they’ve had one for a while, but they want to check in on how their local compliance is going. It sounds like a self-audit is an efficient way to uncover issues internally before they become subject to external auditing or disputes.

Lina Fernandez: Hey, Sam. Yes, that’s exactly right. These check-ins are essential. Focusing on the basics helps prevent fines, claims, or even in some places, possible criminal charges by ensuring that there is no overlook of any local regulation requirements. We also know that employment laws globally is ever-evolving, so regular self-audits is a great way to ensure HR practices align with recent developments too.

Samantha Duncan: Let’s start with timing. Two important moments where an audit can be especially helpful are when a company first establishes itself in a new country or at the start of a new year. Why is the moment a company first sets up in a country or the beginning of the year important? Or do you have any of your own thoughts about timing on these, Lina?

Lina Fernandez: Well, Sam, those are definitely two of the most important moments, but honestly, anytime during the year is a great opportunity for employers to ensure they are following local regulations. To your point, Sam, decisions made on the first date, like hiring mechanics, offer letters, right-to-work verification, and record keeping set a strong foundation. It’s much easier to get this right from the start than fix things later, so doing an audit at the outset of the operations is definitely a wise choice.

But on the other point, many HR systems run on our annual cycles, pay reviews, policy refreshers, training calendars, which typically happens at the beginning of the year. So, the new year pairs naturally with audits of handbooks, training, with HR practices and document retention.

Samantha Duncan: Yeah, for sure. And self-audits really are essential, so companies understand what’s happening on the ground and whether it’s compliant. A structured global-to-local audit process really does the heavy lifting. So, Lina, can you walk us through the first step, which is the global self-audit? What’s in it and how does it help multinationals get to a baseline before we localize?

Lina Fernandez: Sure. So, best practice is to start with a unified self-audit that scales across countries and pinpoints immediate risk. So, a global audit would need to be tailored to a particular type of operations, and a good self-audit framework explicitly targets a range of items. So, it starts from pre-employment screens, hiring, the right to work, day-to-day operations like handbooks, training, leaves, compensation, and, of course, the end of employment issues like termination practices or restrictive governance like non-competes. This framework lets the companies quickly spot red flags and triage what needs remediation versus what can be phased in.

Samantha Duncan: Okay. Yeah, that makes sense in terms of the overall types of topics that these cover. Can you give us some concrete examples of global questions within these topics that are a good idea for companies to, or employers to think about including in self-audits, things that travel well across borders?

Lina Fernandez: Absolutely. So, let’s take pre-employment as an example. Companies will want to check things like job posting requirements, such as salary transparency rules, or whether the company’s brokering checks are allowed in that particular jurisdiction.

Another topic when it comes to managing the daily operations at work, it’s a good idea to check if handbooks and internal policies are up-to-date, whether they’re properly published and acknowledged by the employees. And while doing so, it’s a perfect time to review leave policies. You would want to review your sick leave, parental leave, vacation or PTO, holidays and attendance, all of these to ensure that they are meeting local requirements or even to see if your global policies are unintentionally offering extra benefits beyond what’s legally required.

Samantha Duncan: Yeah, that policy acknowledgement point that you brought up is so important. Certain jurisdictions have strict rules on policy rollout, and it’s not so simple to just send a policy update to employees. So, if a company wants their policies to be enforceable, it makes total sense that a good self-audit will check in to whether a company is launching or updating their policies in the appropriate way. And I’m thinking about an example in Mexico. The internal work regulations there are required to be registered with local authorities. So this step ensures that these rules guide behavior in the workplace and can be used to enforce discipline if any policies are broken.

Lina, what about things like compensation and benefits? You had mentioned that earlier. What are some points to look into there?

Lina Fernandez: Yeah, so in the compensation and benefits area, this topic will cover things like minimum wage compliance, time tracking, overtime triggers and calculations, meal and rest periods, child labor rules, and other things like wage records and correction processes, salaries, deduction practices, and expense reimbursement policies and practices.

Samantha Duncan: Right. Yeah, the global audit is really a full lifecycle view and check-in. And I’m also thinking about that the audit would want to cover performance management and termination, so questions around performance evaluation cadence or progressive discipline, things like termination planning and execution or severance practices. Those very collective redundancy triggers are often different in different jurisdictions. Those are all good parts of the global audit considerations.

Lina Fernandez: Definitely, Sam. And you know what? At the end of the day, the depth of the audit really matters. Sometimes you would want to focus on specific issues because either it is a recurring topic or because it is relevant to a specific industry or because there is new legislation around that topic. So, this could be whether you’re properly classifying independent contractors, whether you have unionized employees in certain countries, and you want to check on union activity and relations like the CBAs or the modern awards, or even concerns about data privacy or health and safety regulations.

Samantha Duncan: Those are all great points, Lina. I think that’s probably all the time we have for this episode. Thank you so much, Lina, for discussing this important topic. And stay tuned for part two, where we further explore building out HR self-audits for different global jurisdictions.
Thank you for joining us for today’s Cross-Border Catch-Up. Follow us to stay in the know about cutting-edge employment issues worldwide.

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