The ordinary dictionary meaning of the word compliance means, the act of obeying a rule, an order or request. This means in a formal sense but in a disapproving manner, compliance is referred to “the state of being too willing to do what other people want you to do.”[1]
According to the Cambridge Dictionary the word compliance in law refers to the obeyance of a particular law, rule or acting in accordance to an agreement.[2] Here are few examples:
- He pointed to the building which lack compliance with the standards meant for the disabled.
- The new law has imposed compliance costs on the Indian businesses which proves to be a deterrent to the price competition.
- All the officials have been working hard to meet the compliance with the all pollution laws in the country.
Understanding legal meaning
Compliance is the state of compliance with applicable laws. There are many ways to apply the definition of compliance, such as compliance with business regulations in the business world or compliance with civil and criminal law. Other ways in which compliance can be applied and understood are compliance with social norms and cultural practices and adherence to commands in a hierarchical environment, such as the military.[3]
A simple way to understand the definition of compliance is to understand its opposite, non-compliance. Non-compliance is the failure to comply with any imposed laws or standards, sometimes due to express violations of these laws or standards. In other cases, non-compliance is due to failure to meet a specified threshold or to update practices to meet current requirements. Not all cases of non-compliance are legal violations. For example, an accountant who does not meet American Institute of Certified Public Accountants (AICPA) certification standards can still work as an accountant, but she cannot advertise herself as an AICPA-certified personal finance professional planner. In any case, the failure to comply with the definition of compliance for a person’s circumstances is not met.[4]
Legal definition
Discussions on the definition of compliance reveal two different types of compliance: the definition of compliance in the law and the compliance definition in the business. At the most basic level, compliance means the same thing in both categories – compliance with imposed requirements. But how compliance is performed and how non-compliance is punished varies considerably between these categories.[5]
An internet search for the phrase “compliance law definition” may provide information about what happens if an individual does not comply with a court order, such as a child support order or a subpoena. If an individual does not comply with such an order, it is considered a contempt of court and can have consequences such as fines, suspension of his professional license and in some cases jail time. Failure to comply with the terms of a criminal sentence, such as probation or sentencing, may result in the individual being sent to jail for violation of probation or being sent back to jail for violation of parole.
Protection of a company via compliance
Compliance involves not only knowing and understanding the legislation that applies to the business, but also being able to demonstrate that the business and its entities are in compliance at all times – this means keeping records of checks, having policies and procedures around the legislation and withhold evidence, that people are taking responsibility for compliance.[6]
According to Thomson Reuters Practical Law, a company, its directors and the employees can be protected by:[7]
- Implementing effective compliance policies
- Educate employees about these policies
- Keep abreast of the various regulations that the company must comply with in all jurisdictions in which it operates and keep abreast of any changes, and
- Identify issues that could lead to potential violations, and ensure procedures are in place to address the issues.
Steps:
1. Firstly, know about the regulations. Know the regulations in your industry and jurisdiction, know what is required of your entity regarding that regulation, and make plans for how you can meet these requirements. Make sure you consider all aspects.
2. Secondly, know about reporting duties. Reporting requirements will differ depending on the sector, industry and jurisdiction in which the organization operates. Consider the terms of any funding, or any ethical bodies or operating organizations to which the business is a member, and see if a quarterly or annual report is needed. We are advised to keep a reporting date calendar to make sure no one comes through without notice.
3. All of these policies need to be put in place to ensure legal compliance that needs to be met and to stay up to date. While evaluating compliance, make sure the policies are still fit for purpose.
4. Asking what the steps are for evaluating legal compliance will depend on the quality of records being kept. Ensure that all records are kept within the organization and at all entities, that the compliance teams know what to keep, and that they are securely stored in easy access to the central repository.
5. Legal compliance is not just about laws but also to cast a net wider to take initiatives in order to evaluate legal compliance and to make sure that a complete scenario of the company’s health is drawn.
6. Ensure that each and every employee is aware about the legal compliances in the company. Ensure that all employees, from the board to the shop floor, know and understand their responsibilities when it comes to compliance. This will likely include organizing training and training programs, as well as regular check-ups and quizzes to ensure that everyone gets the right level of play.
7. Regular checks must be scheduled in order to check compliance. It is to make sure that the employees are understanding and complying to the process.
Conclusion
Legal compliance is the responsibility of everyone in the organization, but those responsible for managing entities will often coordinate legal compliance evaluation steps. Ensure that you have easy and quick access to all documentation related to your entities, including filing dates and regulatory requirements. Compliance is necessary in various fields and legal compliance is like a necessary evil to make a company, organisation or any other body or individual out of the legal consequences in the furtherance of any activity resulting in violation of any law that is non-compliance.
Edited by Pushpamrita Roy
Approved & Published – Sakshi Raje
References
[1] https://dictionary.cambridge.org/dictionary/english/compliance.
[2]Ibid.
[3] https://legalbeagle.com/13720388-legal-what-is-compliance.html.
[4]Ibid.
[5]http://www.smitcompliance.com/assets/the-meaning-of-legal-compliance.pdf
[6] http://www.asalegal.in/compliance.html
[7] https://insights.diligent.com/legal-compliance/steps-evaluating-legal-compliance
