In case you’re not aware, statutory compliance is for companies that help them in operating responsibly. This is done by obeying the rules that are set by the governing body of the respective area where the organisation functions, especially regarding the treatment of their employees. Furthermore, any organisation regardless of its size or stature should comply with respective labour laws laid down by the governing body, which will help to ensure the welfare of its employees.
It should be known that statutory compliance for businesses is massive rules & regulations that are not easy to follow. Furthermore, these rules & regulations are ever-changing, which is why companies need to keep themselves updated all the time.
The Significance Of Statutory Compliance
Every state or country has its labour laws that businesses have to follow. All companies must abide by the laid-down rules & regulations. Due to non-compliance, there can be several problems such as fines, penalties, legal ramifications and so on. Such is the reason why companies nowadays are investing their time, effort and money to meet statutory compliance, with the help of professional payroll companies in the UK.
From professional tax to minimum wage taxes – everything is kept updated with the help of payroll service providers.
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Does Statutory Compliance Change With The Type Of Organisation?
No. It doesn’t matter if a company is an LLP, a partnership firm or a public limited – statutory compliance holds the same for all. Since all of these organisations are hiring their employees and paying their salaries, they have to comply with the respective labour laws.
The Consequences Of Not Properly Complying With Statutory Compliance
1. Loss Of Goodwill For The Company
The primary reason why most businesses stay operational is that they are trusted and known by their customers. Due to statutory non-compliance, there can be a loss of integrity & trust from the purview of the customers. As a result, it stains their reputation because customers will then doubt the organisation’s authenticity.
Even though any financial loss such as a fine or penalty due to the non-compliance can be handled easily, any criminal proceedings against the company for non-compliance will hurt the goodwill of the business. Loss of goodwill will hurt the company not only in the short-term but long-term as well.
2. Suspension Of Licenses
Businesses need certain licenses to be able to operate with the standards of the industry they’re in. Any statutory non-compliance can easily cause their licenses to get suspended – either permanently or temporarily – affecting the company’s current operations. That’s why it’s prudent to opt for professional payroll outsourcing companies in the UK.
3. Penalties To Bear
Penalties or fines are the common consequences of not complying with statutory compliance. Since there are numerous acts under statutory compliance, the penalty will also vary based on the type of non-compliance the company has committed. If any organisation fails to pay the respective fines within time, the fines will continue to collect over time and thereby leading to major losses within the company.
4. Loss Of Employees
It’s a psychological aspect of human beings of not associating with things that are morally or ethically wrong, and the same concept applies here as well. Employees will not like to associate themselves with an organisation that doesn’t comply with the statutory rules & regulations. As a result, employees will leave the company, leading to the loss of essential talent within the company. Moreover, the company will also face difficulties in hiring new employees because of the stained reputation.
However, the good news is that – professional payroll service providers can help companies avoid all these above-mentioned issues and thus focus on the core competencies of the company. Statutory compliance will not be a headache anymore with payroll outsourcing services.