Human Resources Policies play an important role in any organisation and it entails much more than simply hiring and firing staff. Human Resource Management today focuses on the direction, recruiting and management of human assets, as well as developing informed strategies for the near future, in forward-thinking organisations. Durable Human Resource Management encourages social ability, allowing employees to become even more valuable to the company.
Human resources policies are a set of regulations that govern hiring, promotion, work processes, leave, termination, work conditions, compensation, performance evaluation and a variety of other vital activities.
What is the Role of HR Policies in any Organisation?
Human Resources policy is a vital part of any establishment or organisation, as it serves the following functions:
- HR policies in India serve as a code of conduct to ensure a safe and secure working environment for employees.
- The main purpose of HR policies is to efficiently direct and manage employees, ensuring smooth organisational functioning.
- HR policies establish a solid foundation for guiding and leading employees towards progress and welfare.
- HR policies also help protect the company from potential legal issues by ensuring compliance with regulations and mitigating the risk of lawsuits.
- The HR department plays an important role in identifying and addressing issues such as conflicts or declining employee productivity.
- Implementing effective HR policies allows the HR department to proactively handle such situations and safeguard the company's interests.
- Having well-defined HR policies enables the HR department to take timely and appropriate disciplinary actions when necessary.
- Documented policies help ensure fairness and impartiality in policy implementation, avoiding bias or favouritism.
What are the Benefits of HR Policy for Organisations?
HR policies usually benefit organisations in the following ways:
Facilitating Quick Actions:
- HR policies serve as a guidebook for making quick decisions during crisis.
- They provide principles and rules to help concerned teams and departments act promptly.
Ensuring a stable future:
- HR policies ensure consistent decision-making even when loyal and core members leave the organisation.
- They provide a framework for decision-making in the present and in the future.
- HR policies empower employees, managers, supervisors and leaders to make confident decisions without constant consultation.
- They enable timely decision-making, reducing reliance on others and improving efficiency.
Promoting Equal Treatment:
- HR policies ensure equal and fair treatment of all employees, regardless of designation, experience or seniority.
- They promote consistency and unbiased treatment within the organisation.
Supporting Ethical Decision-Making:
- HR policies provide clear guidelines and regulations, allowing employees to make decisions without hesitation or bias.
- They eliminate feelings of self-interest and ensure ethical decision-making.
Boosting Employee confidence:
- HR policies help employees understand their position and roles within the organisation, instilling confidence and a sense of value.
- Improved employee confidence leads to better decisions, increased loyalty and enhanced employee engagement.
Driving Result-oriented and rational practices:
- HR policies establish a system for achieving results and promote rational decision-making.
- They provide a framework for maintaining control over the organisation and employees.
Prioritising Employee Welfare:
- HR policies prioritise the welfare of employees and their families.
- They prevent errors and promote good decision-making, which enhances employee satisfaction, retention, loyalty, engagement and productivity.
What Are the Different Types of HR Policies?
The two basic forms of HR policies are as follows:
General Policies - The general policy elaborates the top management's priorities and philosophies for the formation of the broad plan with the goal of charting the organisation's growth chart.
Specific Policies - As the name implies, these policies address specific issues such as recruitment incentives and bargaining power. Such policies, however, must adhere to the basic structure provided by general policies.
What are the Laws Governing HR Policies in India?
Given below are the set of laws and regulations that govern HR Policies in the country:
Based on Compensation and Benefits
Payment of Wages Act, 1936:
- Employees should be paid on time according to the Act.
- Pay should be provided on agreed-upon dates and times.
- Employee salary payslip must meet industry standards.
- Deductions for fines, damage/loss, loan recovery, etc., are permissible.
Workmen Compensation Act, 1923:
- Provides financial support to employees and their families in case of work-related injuries or disabilities.
- Compensation should be given when an employee is involved in an accident during work.
- Failure to provide compensation can result in legal action against the employer.
Payment of Bonus Act, 1965:
- Mandatory bonus incentives for employees earning less than Rs. 21,000 per month.
- Eligibility for bonus if the employee has worked for a minimum of 30 days in a year.
- Employees have one year to claim their bonus.
- Minimum bonus payable is 8.33% as per Section 10 of the Act.
Payment of Gratuity Act, 1972:
- Eligibility for gratuity after completing five years of regular employment.
- Maximum gratuity amount is Rs. 20 lakhs.
- Gratuity is a retirement benefit provided as gratitude for the service performed during employment.
- All employees are entitled to receive gratuity.
Employees Provident Fund Act, 1947:
- EPF serves as social security for salaried employees.
- Employees earning less than Rs. 15,000 must register for EPF.
- EPF aims to protect the rights of the older generation.
- EPF provides retirement benefits and savings for employees.
Based on Health, Safety and Welfare
The Factories Act, 1948:
- Employers have a responsibility to ensure a safe working environment.
- Adequate sanitation and ventilation must be provided.
- Fire extinguishers should be available in all workplaces.
- The Act limits the maximum weekly working hours to 48 hours.
- All employees should be given a weekly holiday.
The Maternity Benefit Act, 1961:
- Pregnant women who have worked for an organisation for at least 80 days in the last 12 months are eligible for maternity benefits.
- After returning to work, they are entitled to perform only light work for 10 weeks.
- Failure to provide these benefits can lead to legal prosecution.
Sexual Harassment Act, 2013:
- HR personnel play a vital role in addressing workplace harassment.
- They are responsible for creating a safe working environment for women.
- HR personnel should develop sexual harassment awareness programs for employers.
Based on Industrial Relations
- Industrial Disputes Act, 1947:
- The Industrial Disputes Act of 1947 aims to promote harmony between employers and employees.
- It addresses various issues including employer lockouts, employee strikes, layoffs and retrenchment.
What are the Key Components of HR Policy?
Given below are the important components of HR policy that must be included by organisations in their HR policies:
- Clearly defines the recruitment process, including sourcing, screening and selection criteria.
- Outlines the steps involved in job posting, application review, interviews and reference checks.
- Specifies the parameters and qualifications required for candidates to be hired.
- Ensures compliance with equal employment opportunity laws and regulations.
- Covers essential aspects related to employment, such as job title, duties and responsibilities.
- Includes terms and conditions of employment, including working hours, leave entitlements and probationary periods.
- Addresses compensation details, including salary, bonuses and benefits.
- Provides clarity on employee rights and obligations, as well as termination procedures.
Wages of Employees:
- Ensures compliance with wage laws, including the Minimum Wages Act, 1948.
- Defines the minimum wage requirements based on job type and skill level.
- Specifies payment frequency, such as monthly or bi-monthly and modes of payment.
- Addresses policies regarding overtime pay, deductions and bonuses.
Code of Conduct:
- Defines the organisation's values, ethics and expected behaviour for employees.
- Outlines acceptable standards of conduct and professionalism.
- Details the consequences and disciplinary actions for code of conduct violations.
- Clearly outlines types of leave, including annual leave, sick leave and maternity/paternity leave.
- Specifies the process for requesting and approving leave, including required notice periods.
- Addresses provisions for carry-forward of leave, encashment and leaves without pay.
- Provides guidelines for reporting absences and managing leave records.
- Establishes the procedure for setting up and managing the Employee Provident Fund (EPF) scheme.
- Defines employee and employer contribution rates and eligibility criteria.
- Specifies the process for EPF account registration, maintenance and withdrawals.
- Covers provisions for EPF nominations, transfers and updates.
- Details the eligibility criteria for gratuity entitlement, such as completion of five years of continuous service.
- Specifies the calculation method for gratuity pay-outs based on salary and service duration.
- Addresses procedures for gratuity nomination, application and settlement.
- Ensures compliance with the Payment of Gratuity Act, 1972.
Paternity and Maternity Benefits:
- Outlines maternity leave provisions as per the Maternity Benefit Act, 1961, including duration and compensation.
- Specifies eligibility criteria for maternity benefits, such as minimum days of employment.
- Addresses provisions for prenatal and postnatal care, nursing breaks and childcare support.
- Highlights the importance of providing a supportive and inclusive work environment for expectant and new mothers.
Sexual Harassment at Workplace:
- Establishes a comprehensive policy to prevent and address sexual harassment in the workplace.
- Defines sexual harassment, including unwelcome advances, offensive remarks or any form of physical, verbal or visual conduct.
- Establishes an Internal Complaints Committee (ICC) and outlines procedures for filing complaints and conducting investigations.
- Provides guidelines for confidentiality, protection and support for complainants and witnesses.
Dress Code Policy:
- The dress code policy promotes professionalism and a positive work environment.
- It provides guidelines for appropriate attire in the workplace.
- Helps employees dress appropriately for meetings and maintain a professional image.
- Contributes to creating a suitable work culture.
- Establishes open communication channels for employees.
- Includes policies for emails, mobile phone usage, telephones, notice boards and memos.
- Emphasises the importance of updating communication technology and channels regularly.
- Ensures employees are treated equally and without discrimination.
- Prohibits discrimination based on age, colour, sex, caste, creed or other factors.
- Aligns with constitutional rights against discrimination (Articles 14, 15 and 16).
- Specifies the consequences for violating the policy.
Probation and Confirmation Policy:
- Sets guidelines for the probationary period of new employees.
- Allows the company to assess performance and conditions for confirmation.
- Covers terms and conditions during the probation period.
- Includes code of conduct, performance expectations and goals for employees.
Work from Home Policy:
- Establishes an agreement between employer and employee for remote work.
- Clearly defines work timings, deliverables and procedures.
- Provides eligibility criteria for work from home privileges.
- Helps maintain productivity and work-life balance.
- Offers flexibility while ensuring clarity and accountability.
Adaptive Work Culture:
- Adapts policies and practices to accommodate flexible work arrangements, including remote work.
- Specifies guidelines for remote work eligibility, expectations and performance management.
- Addresses communication protocols, technology support and work-life balance considerations.
- Ensures compliance with applicable labour laws and data security measures.
- Defines policies and procedures for business-related travel, both domestic and international.
- Covers travel approvals, expense reimbursement guidelines and travel insurance provisions.
- Addresses safety and security measures, including travel advisories and emergency protocols.
- Promotes responsible travel practices and adherence to ethical standards.
Employment Termination Policy:
- Establishes guidelines for terminating employees, including notice periods and severance pay calculations.
- Covers disciplinary procedures, performance improvement plans and warnings.
- Addresses resignation procedures, exit interviews and handover processes.
- Ensures compliance with employment laws and regulations during the termination process.
What is the Detailed Procedure for Drafting HR Policies?
The detailed procedure for drafting human resources policies for organisations is as following:
Step 1: Choose a Clear HR Policy Title
- Choose a suitable title that accurately summarises the contents of the HR policy document.
- The title sets the tone and context for the rest of the HR procedures.
- Ensure the title answers basic questions, such as whether it explains the entire policy, how it assists readers and if employees can easily comprehend it.
Step 2: Understand the Purpose of HR Policies
- Clearly define the motives behind writing HR policies.
- Address employee doubts and questions effectively.
- Outline the company's objectives and align them with the HR team's goals.
Step 3: Make the document Clear and Concise
- Use language that is easily understood by readers.
- Ensure complete comprehension of the policies document.
- Simplify the language, making it simple, clear and concise.
- Explain all processes in an elementary style.
Step 4: Highlight Important Points in HR Policies
- Ensure that the HR policy applies to every employee, including the leadership team.
- Highlight each rule and regulation within the policy statement.
- Clearly state the repercussions for non-compliance or attempts to circumvent the rules.
Step 5: Simplify the Complex HR Policies
- Recognise that HR policies can be complex and confusing to follow.
- Ensure that all policies and rules within the document are clearly defined.
- Provide references for any unclear approaches or concepts.
- Address the meaning of every piece of information in the HR policy.
Step 6: Create an Outline of Procedure for following the HR Policies
- Create a clear and well-structured outline for the HR policies.
- Break down specific procedures and guidelines into manageable steps.
- Ensure that all employees can easily understand and follow the outlined procedures.
Step 7: Finalise and Review the HR Policies
- Review the HR policies thoroughly before finalising them.
- Read and re-read the policies to identify and rectify any errors or inconsistencies.
- Provide clarity on all small details and ensure no omissions remain.
- Finalise the policies once all necessary revisions have been made.
Step 8: Seek Additional Support from Professionals if Needed
- Seek assistance from professionals of StartupFino to review the HR policies.
- Request comments and feedback to fine-tune the policies and ensure accuracy and effectiveness.
Step 9: Test HR Policies with Members of team and Executives
- Share the final draft of the HR policies with other members of the HR team and senior executives from different departments.
- Gather feedback and incorporate suggestions to enhance the policies.
- Build confidence in the final document through collaboration and input from various stakeholders.
Step 10: Adapt the Policies as Needed
- Recognise that HR policies are not static and are subject to change.
- Stay informed about business decisions, crises, work trends and market influences.
- Regularly review and update the HR policies to ensure they remain relevant and aligned with the evolving needs of the organisation and its employees.
What are the Services Offered by StartupFino for HR Policies?
In an organisation, the HR Department serves as a bridge between upper management and employees and it is through HR policies that the department communicates the organisation's norms and regulations. However, many businesses overlook the importance of developing a comprehensive HR Policy due to a lack of awareness about its various components.
HR policies establish clear ground rules for employees and safeguard both employers' and employees' rights. HR policies include things like leave policies, grievance rules and maternity policies, among other things.
Startupfino is a company that specialises in offering complete services for drafting and review of HR policies.We can aid with everything from providing advice in the beginning phase to ensuring that you meet all the necessary requirements and also keeping your organisation in good legal standing.
Our services include the below mentioned:
- Professional HR policy drafting services tailored to the specific needs and legal requirements of companies in India.
- Expert guidance in creating comprehensive HR policies that align with industry best practices and local regulations.
- Customised policy development to address diverse areas such as recruitment, compensation, employee benefits, leave and performance management.
- Ensuring compliance with Indian labour laws and regulations, safeguarding the company from legal risks.
- Provision of clear guidelines for handling employee termination, disciplinary actions and grievance resolution, maintaining a fair and transparent approach.
- Continuous support and updates to HR policies to adapt to changing laws, industry trends and organisational needs.
By availing our services, entrepreneurs can avoid the negative outcomes of non-followance of rules and compliances. StartupFino works hard to provide services that are prompt and effective, so you can manage your business without any issues and without facing penalties or problems.