Government legislation greatly influences an organization’s reward system. Such regulations regularize and govern how much and how often a company can give or introduce employees to rewards respectively. In the UK, for example, companies must strictly adhere to the National Minimum Wage Act (1998), the Equality Act (2010) and the Working Time Regulations of 1998 (as amended).
In addition to general legislation, government presence dominates in policies on equal opportunities in reward based. It is illegal to reward employees based on their:
- Religion (faith).
- Disability
- Sexual orientation
- Gender
- Age, or
- Ethnicity (race).
In many countries, the legislative demands center on fair employee treatment and reasonable compensation for work done. However, several nations had radical reform guidelines in benefits, compensation, and other reward programs for resident businesses post-COVID. Federal labor law was amended to accommodate changes in:
- Legislative requirements in cases of contract termination, voluntary / early retirement, and substantive requirements for dismissal.
- Working time amendments including maximum probationary period and possible contract renewals.
- Severance / redundancy payments, end-of-term benefits, and avenues for redress.
- Fixed-term contracts, and
- Annual and parental leave regulations.
Legislative Requirements that Impact Reward Practice
According to a Betcherman (2012) review, legislative requirements impact on four labor market aspects:
- Minimum wages
- Employment protection regulatio
- Trade unions and collective bargaining
- Mandated employee benefits
In over 150 countries where the study was conducted, the impacts of such legislation were modestly felt. Market forces were identified as the key drivers to employee reward strategies.
Countries Where Reward Legislation is Felt Heavily
All GCC countries, Denmark, and Canada rank highly as countries where back pay is explicitly provided for in law. The regulator also strictly follows up on implementation of the minimum wage legislation.
France tops countries where employers are most committed to legal requirements on employment benefits. As at February 2021, Scandinavian countries like Sweden and Norway led in employee happiness and job satisfaction indexes due to existing labor legislation requirements.
The robust legal obligations for New Zealand companies have made the nation an undisputed leader, with 26 paid weeks of maternity leave. They also couple this with a relatively high minimum wage law, and 32 days of statutory annual leave.
Statutory Regulations Impact Organizational Reward Policies
Statutory legislation has a hand in the resident organizational rewards system. Although the effect is mild in some places, governments have put in place measures to regularize employee packages and benefits.
Other Relevant Resources
Diversity EO Policy (2021) (PDF)
Characteristics of Reward Management (Publication)
Global Employee Benefits: Attract & Retain Top Talent in 2024 – KOTA