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Human resources (HR) are specialists who are responsible for strategizing management of employees in organizations (small to large), with of course a compulsory condition of compliance to labour laws and rights. In simple words, Labour Law compliance is merely a set of standard rules and regulations which govern the employment scenario. If you have missed the word ‘legal’, we suggest reading the last sentence all over again. That is because, legality assigns a grave seriousness to any and every business aspect. 

The first question that arises is who lays out these rules and regulations for everyone to strictly adhere to? The answer , which you must be aware till now if you have been in business, is the Constitution of India (while certain others are postulated by central/state governments and other authorities). That leaves no room for evasion or violation. In cases of violation of any (or part of ) of these labour laws, a bunch of business-shattering scenarios and punitive actions are bound to happen- lawsuits, social defame, financial crunches, identity depreciation, etc. 

To avoid getting trapped in such a cobweb of statutory incompliances, most organizations have a dedicated team of HR managers who strive to outline legal formalities and benchmarks to follow as a rule. It is quite obvious that no HR team wishes to fire people or indulge in disputes arising out of salaries, holidays, benefits, workplace etiquette, etc., and therefore, they are well trained to handle sensitive topics with utmost delicacy and unbiased approach.  

Although one cannot overlook the disparity of available funds with small business and large organizations wherein the biggies have the luxury of dedicated HR departments, while the small fish in the pond struggles to stay afloat. This has resulted in the current opportunistic scenario wherein small businesses, startups are on a spree to take advantage of complying to only broad-level labour laws, while assuming being under the radar concerning others.  

Here’s a list of some life-saving tips for startups, small to medium organizations, large companies to comply with labour laws:

1. Employee Terminations and Disciplinary Actions

HR managers often find discipling employees and making termination decision as the most challenging task. With every decision they make, there is a risk of law suite. However, having a clear idea about disciplinary and termination procedures, you can avoid the costly risk. Employment relationship is segregated into ‘at-will’ and contractual categories. If a contract exists, the termination and discipline must be handled as per the contract. Under contractual category, you can fire the employee owing to reasons such as gross misconduct, poor performance, work policy violation or layoff, by giving a notice period (except for misconduct) to the employee. However, ensure that the termination procedure not only complies with the federal laws, but also the state laws as well. For instance, as per the Karnataka shops and Establishments Act, 1961, an employer cannot fire an employee who has been working in the company for more than 6 months without ‘reasonable cause’ and must provide one-month notice period. Whereas as per the Delhi shops and Establishments Act, 1954, if an employee is associated with the company for more than 3 months, then he/she must be given a notice period of 30 days. 

Under the ‘at-will’ category, the employment relationship can be terminated at any time by the employee or employer for any or no reason.  

2.  Workplace Discrimination

Among the most important legislation for HR managers to know, Equal Employment Opportunity (EEO) laws protect individuals against the discrimination on the basis of Nationality, age, gender, disability, genetic information, race/color, pregnancy, or religion. That is, the constitution bans an employer from discriminating against the employee based on religion, caste, race, etc. In case of any discrimination, the Constitution gives right to the employees to file a complaint  in the labour court. HR managers must be familiar with the individual laws to safeguard the protected classes of individuals. These laws are applicable in all stages of an employee’s including pre-hiring processes to rightful termination. HR professionals must not only know the laws but also the approaches that can be applied to avoid such practices.

3. Wages and Hours

Awareness and compliance to different labour wage-related acts passed historically but still valid is a must; the Payment of Wages Act – 1936, the Employees PF & MP Act – 1947, the Workmen’s Compensation Act – 1923, the Payment of Gratuity Act – 1972 and many others are landmark laws in Indian law history. Moreover, there are continual amendments which are made to these laws and need to be kept in record. For instance, a recent amendment effective 29 march 2019, payment of gratuity has been increased from 10 lakhs to 20 lakhs.  

4. Self-financing security 

Employees can now secure their health thereby their future via life insurance. As per the Employees State Insurance Act – 1948, every employer must contribute 4.75% of 6.5% of the insurance to the employees who are earning 15,000 or less than that per month. This provision also provides medical and health benefits to all the employees and their 6 dependents. In any unfortunate case of death or serious injuries, the company is required to bear all the expenses through an insurance. 

5. Health benefits 

It is a must for you to provide your employees with health benefits such as medical leaves,  maternity benefit, apprentices, etc, as per the Apprentices Act-1961, an employee can take casual leave of 12 days, medical leave for 15 days and 40 days in case of accumulated leave. In addition to these, they can also take certain other 10 days paid leave. For the welfare of women, Indian Constitution has enforced The Maternity Benefit Act – 1961, according to which you must provide maternity leave to a pregnant employee (if she has worked for 80 days) and on resuming the work, she has the provision to take up light work for 10 weeks. As an HR, you should also ensure that none of your employees are working more than 48 hours a week (as per federal law).  

6. Employee benefits 

The perfect company offers the best employee benefit packages. Under the Indian Accounting Standard (Ind AS) 19, the employer must mandatorily provide a number of benefits such as health coverage, leave benefits, overtime benefits, termination benefits, and statutory retirement programs. 

7. Gender discrimniation 

Today, although women have proved that they have equal skills and ability as that of men, the issue of gender descrimination still holds us back. Gender discrimination, although is primiarily an issue for women, it can be directed towards men as well. Title VII of the Civil Rights Act-1964, of federal law, protects individuals from discrimination based upon the gender. This law makes it illegal for every employer to discriminate in hiring, firing, promoting individuals, etc. based on the employee’s gender. Also, as an HR manager, according to the Equal Remuneration Act -1976, you cannot discriminate on the basis of the gender of your employee in offering wages or benefits.  For instance, if you are planning to promote one of your employees, you can’t legally avoid opting a female employee because of gender. 

8. Leisure/Holidays

As an HR, it is your responsibility to ensure the cultural sentiments of your employees are not hurt.

Hence, you must comply with the rules of State Wise Factories and Establishments (National, Festival and other Holidays) Act while deciding the leave policy. These rules decide leaves on the basis of religious or cultural beliefs of a state and National & state leaves. According to Factory Act -1948, you cannot ask your employee to work more than 9 hours/day and also weekly off is mandatory. This provision has also adopted Shops and Establishment acts in various states of India. For e.g., as per Delhi Shops and Establishments Act-1954 every employee must be provided with a casual or sick leave of not less than 12 days every year. 

9. Workplace safety 

The nature of the employment and the working conditions tend to have major consequences on the health of your employees. For the well-being of the employee, Indian Constitution has enforced major acts such as the Factories Act-1948, the Mines Act-1952, the Dock Workers (safety, health & welfare) Act-1986, etc. In accordance with the Factories Act-1948, as an employer, you must ensure the health, welfare and safety of all your employees while they are at the workplace. The administration must rectify risks involved equipment/workplace, provide clean drinking water, sanitation, ventilated working space, etc. Compliance with this act can be a boon for your company as it can avoid future labour conflicts.  

10. Sexual harassment 

Sexual Harassment (Prevention, Prohibition and Redressal) Act-2013 has taken the private sectors by storm from the date of its enforcement. The Act defines sexual harassment at the work place and also safeguards against false/malicious charges. The Act covers concepts such as 'hostile work environment' and 'quid pro quo harassment' as forms of sexual harassment only if it occurs in connection with behaviour or act of sexual harassment. In the majority of the cases, HR managers, responsible for the effective performance of the Internal Complaints Committee, will the first recipient of the harassment complaint. The Internal Complaint Committee will have the same power as that of civil court under the Code of Civil Procedure-1908, when trying to inspect into matters like production of documents. 

11. Disabilities discrimination 

The Rights of Persons with Disabilities Act -2016, prohibits discrimination against differently disabled individuals in both private as well as government sector. As per the provisions of RPWD act, as an organisation, it is a must for you to provide measures, facilities and amenities to individuals with disabilities to enable them to discharge their duties in an effective manner.   

12. Retirement Benefits 

As per the rules of EPF, launched in 1995, an employer can contribute 3.67% towards EPF and 8.33% towards EPS. Private sector employees now have reasons to rejoice after the highest court (Supreme Court) of India ordered EPF organisation to change the pension plan in April 2019. That is, EPS subscribers can now draw upto Rs 15,000/ month. 

It is only through satisfactory compliance to labour laws that the largest youth population country in the world will be able to tap this golden opportunity and expedite its economic growth.