Employment law compliance, accurate payroll processing, and proper HR administration are not only essential to meet legal requirements, but also key to avoiding substantial fines during labour inspections. A thorough HR audit can make all the difference. But what exactly does a Comprehensive Payroll, Employment and HR Audit entail - and how can it benefit your company? Let’s take a closer look!
What does a comprehensive payroll, employment and HR audit entail?
During a comprehensive audit we examine the following areas:
The examination of employment contracts
We verify whether the employee information notice complies with current labour law regulations and statutory requirements. We examine the presence of all mandatory content elements and assess the legal validity of the information provided in the notice.
Existence and legal compliance of the statutory employee information notice
We verify whether the employment contract complies with current labour law regulations and statutory requirements. We examine the presence of mandatory content elements and assess the legal compliance of the clauses included in the contract.
Examination of job descriptions
We examine the content elements of each job role and assess whether they are aligned with the corresponding employment contracts. We also review whether the required competencies and qualification expectations for the given position are appropriate and compliant.
Examination of employee declarations, attendance sheets, and payroll documents
We assess whether the HR administration is complete and accurate, ensuring there are no discrepancies between the reported data and the information and dates stated in the employment contracts. We review attendance records, payroll sheets, and the content and legal basis of payments to verify their accuracy and compliance.
Exit Process Review
We assess whether the offboarding process is carried out in accordance with legal requirements, including final settlements, issuance of exit documents, payments, and proper deregistration of the employee.
Data Consistency Check
We verify that the information provided in the employment contract, registration documents, attendance records, and payslips is consistent and aligned.
Compliance of Work Schedule and Employment Type
We examine whether the employment type and its documentation comply with legal regulations. We also assess whether the chosen form of employment ensures maximum operational efficiency for the company.
What does a labour authority audit examine?
During a labour inspection, the authority examines, among other things, whether employees have been properly registered, whether working time records are accurate, and whether wage payments are lawful.
During a labour inspection, authorities typically examine the following:
- Employee registration and deregistration: Proper documentation of the start and termination of employment relationships.
- Working time records: Accuracy and completeness of attendance sheets and other time-tracking documentation.
- Payroll documentation: Legality of wage and benefit payments, cross-checked with attendance records.
- Employment contracts and mandatory notices: Existence of required documentation and legal compliance of contractual content.
- Special regulations for certain groups: Compliance with rules regarding young workers, women, and employees with reduced work capacity.
- Simplified employment: Adherence to specific rules, including contracts and notifications.
- Working and rest time regulations: Compliance with legal standards related to working hours and rest periods.
- Leave entitlements: Proper recording and issuance of annual leave.
- Remuneration: Timely and lawful payment of wages, bonuses, and statutory allowances.
- Occupational safety and working conditions: Compliance with mandatory health and safety requirements aligned with the employee’s job role.
- Employment of third-country nationals: Possession of valid work permits and adherence to applicable laws.
- Temporary agency work: Compliance with applicable regulations.
- Employee documentation: Proper issuance of payslips, final settlements, and employment certificates.
- Termination documentation: Accurate and timely provision of termination-related records and final settlements.
What Are the Potential Consequences of Irregularities Identified During a Labour Inspection?
If a labour inspection reveals compliance issues, it may result in serious consequences. The inspecting authority may:
- Terminate unlawful employment practices
- Order the employer to correct employment-related irregularities within a specified deadline
- Require the employer to pay a financial contribution to the state budget if a third-country national is employed without a valid work permit or EU Blue Card
- Impose labour fines
- Order the payment of any outstanding wages or bonuses to employees
- Prohibit the employer from continuing business activities
Typical Issues Identified During Labour and HR Audits
During our audits, we frequently encounter the following problems:
- Discrepancies between reported and actual working hours
In some cases, attendance records do not accurately reflect employees’ actual working hours, which may result in significant fines during an inspection. - Missing or legally non-compliant documentation
We often find that employment contract amendments, employee information notices, or job descriptions are missing. It's also common to encounter incorrect legal references or unlawful clauses in contracts, which pose serious legal risks. - Registration Issues
In several audits, we discovered that probationary employees were not registered on time, exposing the company to legal liability. - Home office arrangements
Many companies are open to remote work, but their employment contracts do not reflect this shift. Traditional contract templates are often not suitable for home office arrangements, creating compliance gaps. - Inaccurate payments
Our review of payslips often reveals inconsistencies between payments, attendance records, and employment contracts. Overtime and weekend work are sometimes not properly recorded or compensated, posing a major compliance risk. - Working time banking (timeframe scheduling)
While working time banking can be an efficient solution, documentation and accounting practices are frequently flawed. Inaccuracies can lead to significant penalties.
Labour fines have increased significantly - A Preaudit is more important than ever!
In 2025, labour fines have significantly increased, making it more crucial than ever to maintain proper administration and documentation. A well-executed Payroll, Labour and HR Audit can help your company avoid penalties while enhancing transparency and operational efficiency.
HR Audit - Request Expert Advisory Support
A Payroll, Labour and HR Audit is an essential tool for any company seeking to ensure legal compliance, reduce employment-related risks, and streamline HR processes. Don’t wait for a labour inspection - be proactive and safeguard your operations with a comprehensive HR audit!
