Cross-Border Catch-Up: Building a Global HR Self-Audit Framework, Part 2

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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 continue our two-part series on the importance of conducting HR self-audits, where compliance on the ground will differ across jurisdictions. In part one, we outlined how employers can build and implement a global HR audit that will help find issues across borders. Today, we’ll dive into best practices to ensure self-audits catch local law nuances in the various countries an employer may have operations in. That global core principles we discussed in the last podcast give leadership a standard lens and common language, which is invaluable when comparing practices and setting priorities across regions. Once that global picture is clear, the real work starts, adapting country by country.

So Lina, what are some examples where what works at home might fail abroad? I’m thinking of a place like Mexico where I know there are some unique HR compliance measures that employers need to regularly check in with.

Lina Fernandez: Thank you, Sam. Yes, Mexico is a great example. I believe in part one of this series, we touched on Mexico a little bit with respect to internal work regulations, but it’s not only that. So, when you’re structuring a global self-audit, you will overlook the country-specific situations that need to be analyzed more carefully. So, for example, Mexico requires employment agreements to be written and in Spanish, and they have to contain specific information such as the employee’s role, contract type, location, schedule, salary, benefits, and classifications. These terms are critical. So, omitting these basics may create immediate risk. A self-audit may also want to ask HR about their background check protocol. So, in Mexico, receiving job offers based on the background check results can be problematic. And even sometimes the scope itself of the background check might raise concerns that need to be addressed promptly. A good HR self-audit can also confirm how probationary and initial training periods are structured and documented, including whether a joint commission for training and productivity is established when needed.

Samantha Duncan: Thanks, Lina. Those are excellent flags that are unique to Mexico. And since Mexico has a pretty robust seniority framework, is that something that an employer would want to check in or make sure it has established if starting to operate there?

Lina Fernandez: Thank you for bringing that up, Sam. Actually, yes. In Mexico, seniority affects vacation, severance, and other entitlements. So, those are tracking systems that the company will want to ensure are talking to other parts of their operation. So, it’s not just a system that remains and stays with HR. Another local nuance. If an employee doesn’t acknowledge a written termination notice in Mexico, you may need to notify the labor code between five days. A procedure of meals like that can really snowball into litigation exposure. So, it’s a piece that a self-audit would want to verify and ensure local staff are ready for if the situation arises.

Samantha Duncan: Those are exactly the kinds of, right? You don’t know what you don’t know details that a local addendum would want to address before problems kind of land on a desk. Now, let’s pivot to Australia, which has a pretty distinctive landscape in the area of employment law. What are the audit questions that would potentially reveal gaps there?

Lina Fernandez: When it comes to Australia, gender pay reporting regime comes to mind. It requires employers to submit to the workplace gender equality agency, certain reports. So, employers would want to be ready to produce their latest report when requested. And local trends also help guide the focus of the audit. In Australia, this means that employers would want to pay special attention to things like whistleblower, modern slavery, anti-bribery, environmental and sustainability, and psychological hazard policies, plus procedures to identify, assess, and control psychological risks.

Samantha Duncan: I’m so glad you mentioned the psychological risks. And in Australia, sometimes they refer to them as psychosocial risks. Australia is on the cusp of really upping their enforcement of companies to determine whether they have adequate safeguards in place beyond just typical health and safety, and whether they cover psychological risks in the workplace, like you were saying, Lina. So, an HR self-audit for operations in Australia that covers that topic is bound to help companies prepare for that.

Lina Fernandez: Yes. And these are great tools to be ahead of the curve in terms of development in local employment law enforcement. Another point on casual employment, for example, which is a recruited hot topic, local HR will want to be prepared to respond to how positions are classified as casual, whether hours are consistent, what penalty rates apply, and whether eligible casuals have a pathway and process to request conversion to permanent employment.

Samantha Duncan: That’s a great snapshot of how an Australia addendum quickly zeroes in on the structural issues that general global policies might miss. Are there any other unique local areas that come to mind right now that an HR self-audit can help flesh out?

Lina Fernandez: Yes. Another example could be in the Dominican Republic where there are specific areas in which HR self-audits will be unique. In the DR, for example, the local addendum to the audit would want to address whether employment contracts and internal working rules are properly registered with the Ministry of Labor, that occupational health and safety programs have been submitted, that there is a health and safety committee that’s properly set up with meeting minutes that are submitted to the Ministry of Labor, and that all documents that are employment-related are translated into Spanish. It is also worth double checking that social security contributions are current, that the Christmas bonus goes out by December 20th, and of course, profit sharings are handled correctly. And one key point here, employers will want to review their workforce composition for foreign worker ratio compliance. And of course, ensure that proper receive of the discargos, which is the document provided to the employees upon termination of employment, is issued and executed properly.

Samantha Duncan: Thanks, Lina. As we talk more, I think this is illustrating there really are just a ton of topics that these audits can help sort through and make that process easier for employers. So, once the global and the local audits are completed, how can companies move from the findings of those self-audits to fixing issues that they find?

Lina Fernandez: That is a really good question, Sam. Generally, it is a good idea to categorize issues into three lanes. The first one are those issues that require immediate compliance. So, things like mis-invited to work documentation, absence of required internal regulations, non-compliant wage practices. These required urgent remediation plans. Then the second category would be those medium-term priority. In this category, we will find handbook rewrites, training program updates, or psychological hazard procedures. This may allow for more time flexibility as they tend to require strategic planning, so they may be slotted into a quarter-by-quarter roadmap. And then the third category will be those longer-term operational excellence items. Things that fall in this category are those that tend to be on the best practice bucket like record keeping practices, and this can become part of the annual HR calendar. So, a well-organized structure of the global and local addendum checklist will make the strategy straightforward.

Samantha Duncan: I think the advantage is very measurable, right? Leaders can see where they were, where they are, and what remains to be fixed or resolved, or just made stronger, right? Country by country, theme by theme. So, can you talk a little bit about what the practical steps are that an employer can take this quarter?

Lina Fernandez: Sure, Sam. So, I would say the first one is that employers will want to consider locking a global self-audit and collect responses and documents from local staff. So, maybe start with looking into things like sample job ads, applications, offer letters, employment agreements, work authorization records, handbooks, training logs, leave policies, of course, which in our records and termination documentation. And then the next step would be for employers to consider including country-specific agenda. If employer’s global presence expands in multiple jurisdictions, then a good option here would be to prioritize the, let’s say, top five locations with the largest headcount.

Samantha Duncan: Those are great steps that an employer can take. And I think what you’re saying, Lina, really highlights that the bonus here is cultural too, right? These processes beyond compliance, they build trust with employees and local stakeholders because employers would be consistently aligning policy with practice and inviting feedback through trained managers and credible reporting channels. So, as a final word, why is it important for employers to prioritize this now rather than waiting for an audit letter or a headline-grabbing complaint?

Lina Fernandez: That’s key, Sam. Employers could have the flexibility of an internal privilege review on their own timeline. A structured global audit plus targeted agenda for specific jurisdictions tend to give employers early warning on unique requirements so employers can remediate before issues hardened into complaints, lawsuits, and fines, and in some places, even worse situations.

Samantha Duncan: Thank you so much, Lina, for walking us through this important topic.
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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