In 2016, the British sandwich retailer Pret a Manger suffered huge damage to its reputation, as well as compensation claims, when a teenager died after eating a baguette containing sesame, to which she was allergic. In keeping with EU regulations, Pret a Manger chose to deliver allergy information orally, and with stickers within fridges telling customers to ask staff members for details; but an inquest heard that stickers were not visible. The coroner said
“I was left with the impression that Pret had not addressed the fact that monitoring food allergy in a business selling more than 200 million items a year was something to be taken very seriously indeed”.
This tragic case highlights the consequences of inadequate retail compliance training and observance.
Compliance Officers in retail companies both large and small are beginning to gain the respect they deserve. Retail compliance training has become an important and complex factor in the running of a retail business, particularly in those businesses that deal with a range of suppliers and clients. Nowhere is this more to be seen than in the retail sector, where even specialized retailers may be dealing with many suppliers, from all over the world. In the past, this sector was not seen as one of the most heavily-regulated industries, but modern concerns about public safety and increasing globalisation are bringing new challenges.
As every Compliance Officer knows, seeking out the best and most appropriate training is the key to effective practice. For such a wide-ranging issue, it is important that the retail compliance training provider can demonstrate expertise in all aspects of the subject, and can offer programmes which incorporate the latest updates in regulations and legislation.
We have drawn up a short, alphabetical list of the major issues that face Compliance Officers in Retail.
Antitrust laws were developed in the USA in order to outlaw practices that could damage fair competition. Some of these laws are complex, and whilst they may concern foreign markets they could be applied under different legal headings. Unfair Business Practices and Monopolies are two terms that are frequently found in international markets. In the retail sector, dropping prices in an attempt to force the competition out of business used to happen quite frequently. Now, it is illegal. Can you be sure that none of the means you use to retain your competitive edge infringe the regulations?
BRIBERY AND CORRUPTION
These two terms would seem to be self-explanatory, but there are many ways in which employees could find themselves breaking regulations that were designed to outlaw the practices. The rules change frequently, and sometimes only in small ways. Entertaining and hospitality used to be perfectly acceptable ways of attracting new clients and sealing a deal, but then they were no longer allowed as claimable expenses by revenue collection agencies, and after that, the rules became stricter and more frequently enforced. Could the manager of one of your stores accept an invitation to a football match if a supplier were to offer it? It is hardly the same thing as a free holiday on a billion-dollar yacht, but is that simply a matter of degree, or are both against the law? Appropriate anti-bribery and corruption compliance training can include scenarios which help to make these distinctions.
CA CT 2-HOUR MANAGER SEXUAL HARASSMENT
At least two hours of sexual harassment training for supervisors or managers is mandatory in Connecticut and in California for all companies with more than fifty employees (CT) or as few as five (CA), as well as all public employers. This training could also be appropriate to companies operating outside those states, but there it is essential.
With major corporations making headline news when hackers breach their security systems, it is hardly surprising that smaller businesses find the question of cyber security daunting. Protecting expensive databases and software systems used to be a simple issue of property protection; now, in addition to the financial losses, companies may face prosecution for breaches of cybersecurity. Minimising that risk is a matter that no company can afford to leave to chance.
This is now a universal demand, and any company that stores information about its clients, suppliers, personnel or others has to ensure that all details are stored securely and that privacy is strictly enforced. This is not the same thing as cybersecurity. Members of staff need to know who is permitted to view the files, and what information, if any, may be passed on, and under what circumstances. If a member of staff has applied for a mortgage, is your HR department permitted to give details of the employment record to the lender? What about enquiries from the police?
ENVIRONMENT, HEALTH AND SAFETY
Health and safety received a bad press for several years, with often apocryphal stories about precautions being taken to ridiculous lengths being passed around. Breaches of regulations designed to protect the environment are now seen, not only as illegal, but also as morally indefensible, and the bad publicity surrounding those breaches will be toxic for your company’s image. Do you, and your workforce, know the regulations regarding the safe disposal of your company’s waste? Is your signage on protective clothing and working machinery legally correct and up to date?
ETHICAL WORKPLACE CONDUCT
This is a huge subject, and it permeates every level of a business, from the ethical terms and conditions of contracts with suppliers and resellers to the use of the company’s telephone for personal calls. Being able to demonstrate that your company’s working practices are ethical, as well as legal, is an asset to the company, and one which your marketing department will find helpful. The return on investment for training in this field is high.
As highlighted by the Pret a Manger case, if an employee doesn’t fully understand their job, there can be disastrous consequences for food retailers – a major concern in a sector where staff turnover can be high. Modern business practices call for ever-higher levels of vigilance and attention to detail. The keeping of scrupulous records, in areas such as food temperature logs and employee records, will be crucial in the event of audit or investigation.
The General Data Protection Regulation came into force in May 2018 and is a regulation covering all the members of the European Union and the European Economic Area. Privacy and the protection of data are the key principles of the regulation. Because it is comparatively new, many companies are not familiar with its requirements and may be in danger of breaching them. The growth of online retailing presents new challenges in this field, as retailers may be operating over a wide range of jurisdictions, with varying data protection requirements.
HARASSMENT & DISCRIMINATION
Most people would be surprised and offended were they to be accused of harassment or discrimination, and yet it happens far more frequently than is generally acknowledged. Even a well-meant compliment, paid at an inappropriate moment, can come under the heading of harassment, as can a private joke if overheard by somebody who finds it offensive. Discrimination, or, more frequently, the accusation or perception of discrimination, is a problem that has beset many organisations, and most of them were unaware of the hazards of this difficult subject.
The regulations covering retail compliance training in the field of Healthcare, particularly in the USA but also in Europe, are very strictly enforced. Patient safety is the most important of the many regulations, but Compliance training also covers privacy. Confidentiality, where patient care is concerned, is vital, and no company involved in Healthcare can afford to take risks with safety and confidentiality. Every member of the workforce who comes into contact with patients, or with data regarding their condition and treatment, needs to be trained in those aspects of Compliance that affect their work. Retailers of healthcare products need to understand their obligations with regard both to patient confidentiality and information sharing.
The Health Insurance Portability and Accountability Act is a law that came into force in the USA in 1996. Although the intention behind the law was the simplification of Health Insurance regulations, particularly as applied to insured people when they are between jobs, its application has proved to be more complicated than was anticipated. Breaches are common, and many companies complain that compliance is difficult. HIPPA Training will help your workforce to navigate these challenging waters.
Insider trading is illegal in most countries, although the details of the regulations may differ. Taking advantage of information that is not in the public domain in order to profit from the purchase or sale of a public company’s stocks or shares is the generally accepted definition of Insider Trading. However, there can be grey areas; where can a line be drawn between inside information and personal expertise?
IP & TRADE SECRETS
Intellectual Property and Trade Secrets have to be protected. This is why contracts usually stipulate that employees who have access to them will not take up employment with rival companies within a set time frame after leaving the company. But what is a reasonable time frame? And under what circumstances could such a clause be deemed legally unfair? Are you risking the loss of your Intellectual Property?
According to Wikipedia, there are between 21 and 70 million modern slaves in the workforce today. Naturally, you do not use slavery in your business, but it is being discovered in a range of industries, from agriculture to building and garment manufacturing. The UK’s multi-billion fashion industry employs many thousands of people, and industry bodies such as the UK Fashion and Textile Association have stated that this can make fashion companies vulnerable to “unscrupulous providers and criminals who exploit workers for their labour”. A new partnership, signed by leading British retailers, is intended to enhance efforts to tackle modern slavery in supply chains. The fashion supply chain is hugely complex, but retailers can no longer plead ignorance of their sources of supply, and buyers need to understand their complex legal obligations.
Money laundering is no longer a simple matter of spreading the proceeds of crime through small transactions in ‘clean’ businesses; it is a multi-billion dollar international trade, and it is highly sophisticated and often very complex. Banking and investment regulations and laws are being drawn up and enforced to combat money laundering. Can you be certain that you are aware of those that apply to your business? And would you and your workforce recognise the warning signs?
RESPECT IN THE WORKPLACE
Where respect in the workplace is concerned, whilst there are legal obligations of which all managers and supervisors should be aware, it has been found that a respectful environment is more productive, with less sickness and absenteeism. In the US, the Harvard Business Review reported that workers rank being treated with respect as the top factor influencing motivation and engagement, and a petition at the retail giant Zara called for more respect for the store staff. A recent study by ACAS, the UK Advisory, Conciliation and Arbitration Service, found that “Dignity and respect top employees’ workplace wish-list”. Employees at all levels should be offered appropriate training on treating co-workers with respect: the return on investment is high.
A recent survey on computer security uncovered many instances of lax behaviour. The password “123456” was found in many cases, as were birthdays and pets’ names, and an employee had stuck a reminder of the day’s passwords on his computer monitor. This was not malicious; the people concerned had simply not realized the dangers. How many of your employees see passwords as a nuisance? What ends up in the wastepaper baskets at the end of the day, and who disposes of the contents? These are basic matters, but training will underline the importance of taking them seriously, as well as looking into more sophisticated security issues.
When people think of harassment, it is usually the sexual form that first springs to mind. The sense of entitlement that allowed some men to corner a woman at the coffee machine or the photocopier has largely, but not entirely, been eliminated, but sexual harassment now covers more than unwanted sexual attention or even mild flirting. Within retail alone, it’s estimated that 80 per cent of cases of sexual harassment or sexual misconduct go unreported, and studies have also shown that in the United States, the retail industry has the second-highest rate of sexual harassment cases of any sector. Any behaviour that is likely to cause embarrassment or intimidation is now illegal; but does everybody in your workforce understand this? Or realize that a mild joke, or even a compliment, maybe an offence? The penalties for infringement are high.
In May 2019, the Trump administration increased U.S. tariffs on $200 billion worth of Chinese imports from 10% to 25%. A new trade war will have serious repercussions across the retail sector, threatening jobs and store closures. Even without these latest developments, frequent fluctuations in trade laws occur as political situations and relationships between countries change. It is no longer a simple matter of knowing which suppliers can legally import into the USA; trade routes also have to be checked, and it may be that manufactured products use components that have become illegal under a new regulation.
AND FINALLY – PREVENTION
Prevention should have come further up our list, were we to stick to our alphabetical rules, but prevention is too important to be buried somewhere in the middle. Prevention is the key-word in retail compliance. When a breach of a Compliance law or regulation has occurred, the unfortunate Compliance Officer has few choices; self-reporting, which may minimize the financial penalties, but will still be painful; damage limitation in whatever form can be devised and applied; prayer, perhaps.
A professionally trained workforce, aware of those aspects of Compliance that apply to their own sphere of influence, is the best form of prevention. Even if a breach occurs, if a retail company can demonstrate that the correct training had been given, it will receive credit for that. Breaches of regulations, however, are far less likely when members of staff know the law, understand the implications of their actions, and are motivated to abide by the legal and ethical standards of their employers.
About the Author
Ethics and compliance leader providing tools, education, and advisory services for global companies to inspire principled performance. LRN’s overall approach recognizes the inherent limitations of rules and regulations in influencing behaviors. In our view, focusing on actions that help build and maintain a values-based culture will mean more compliance and reduced costs as a result of tangible and sustainable behavioral change.More Content by LRN Corporation