There is an increasing level of scrutinisation of businesses and how they operate by corporate regulators. As the investigatory powers of the regulators gain strength, as well as wider access to more sophisticated monitoring technology, companies should be shifting their focus from “do we need to have a compliance training program” to, “how much compliance training is enough?”
There are many benefits to a compliance training program. A key area of benefit is helping employers reduce or avoid liability in the case of employee non-compliance.
A clear example of this occurred in April 2012. A woman lodged a sexual harassment compliant under NSW Anti-Discrimination Act (1977) against her colleague and her employer. The Anti-Discrimination Tribunal (ADT) found the colleague’s conduct amounted to sexual harassment, ordering him to pay the woman damages of $10,000. However, the ADT did not hold the employer liable because it found that the employer had taken all reasonable steps to prevent the breach. The employer was able to avoid liability because:
- the employee was given the Code of Conduct when he started work — and on four subsequent occasions (including on promotions) — and he had also signed up to the Code of Conduct
- the employee had been warned of the penalties for breaching the Code of Conduct
- the employee had attended relevant training on four occasions in the two years prior to the incident
- this was a one-off incident — the outcome could have been different if there was a history of inappropriate conduct, particularly if the employer had not addressed it
- the employer conducted a timely investigation and issued a disciplinary warning
Here’s the snapshot of the case.
A recent US case also highlights the benefits ‘robust’ policies and procedures can have. The SEC and DOJ prosecuted an employee but not the employer, pointing to internal controls “which provided reasonable assurances” that its employees were not breaching company policies. These controls included, but were not limited to:
- Training personnel on its policies at least 5 times a year
- Training individual on specific legislation at least 7 times
- Providing individual with at least 35 compliance reminders on legislation
- Required individual to certify his compliance with governing body on a regular basis
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So why is this important for businesses?
Both these cases demonstrate how a properly implemented and well managed compliance training program can help to reduce liability risks for businesses. Both organisations were able to successfully avoid liability because they were able to prove they had fulfilled their duties as responsible employers, as outlined by workplace laws. Importantly, compliance training programs provide demonstrable proof that an organisation has carried out the required training, and enables the organisation to provide records of training to the regulator if or when required. To reduce your liability risks in 2013, don’t ask “do we need compliance training?” instead ask “how much compliance training is enough?”