11 HR Policies in India Your Organisation Can’t Ignore

Strong HR policies in India are essential as you will deal with complex legal systems comprising country, state and labour laws. On top of it, you will also be managing a diverse workforce. HR policies set clear expectations, create a fair work environment and help you comply with local laws. 

In this post, we will look at the top 11 HR policies for employees in India that you must add to your HR playbook.

1. Employee Contract

An employment contract is a legal document that binds both employee and employer. It outlines all the below significant terms and conditions of the association:

• Job role and description
• Type of role (Part-time, Full-time, Contract, Freelance)
• Probation period (if any)
• Tenure
• Remuneration and benefits
• Confidentiality.

Tip: Check Indian labour laws, the Companies Act and the Contract Act to draft a locally compliant employee contract.

2. Code of Conduct

A code of conduct policy outlines expected employee behaviour and ethics during work hours. A typical employee code-of-conduct policy has the following elements:

• Professionalism
• Job duties and authority
• Use of company’s assets
• Protection of company property
• Communication
• Collaboration
• Dress code
• Gifts at work
• Disciplinary actions
• Absenteeism and tardiness
• Avoiding conflict of interest
• Non-compliance and consequences
• Maintaining occupational health and safety
• Maintaining privacy and confidentiality.

Tip: To write a code-of-conduct policy, you must first dig into company culture, values and local labour laws. 

3. Working Hours

The working hours policy defines:

• Standard working hours: What are the expected working hours and how many days do employees have to work? Some Indian companies opt for a 6-day workweek and some for a 5-day workweek. You will also see working hours vary from 8 to 9 working hours. 
• Break: How much break are employees legally supposed to get? As per the Companies Act, any employee working for more than five hours must get at least half an hour break.
• Overtime: How many overtime hours are permissible per the labour laws? In India, an employee can extend up to 12 hours per day, but they still need to work within the weekly upper limit of 48 hours. After crossing the weekly limit, employees are eligible for overtime pay. 

4. Leave Policy 

A leave policy gives employees an idea of how many leaves they are eligible for. The main types of leaves to define in the leave policy are: 

• Public holidays and festivals: India has three public holidays: Republic Day, Independence Day and Gandhi Jayanti. Apart from these three holidays, you must also give holidays for festivals or any state events, which vary from state to state. 
• Sick leaves: How many leaves can employees take for sickness? 
• Casual leaves: How many short-term leaves can employees take for personal reasons or unforeseen events?
• Earned leaves: Earned leaves are paid leave granted based on the number of days one has worked in the company. Employees can use it for sickness, vacations or any personal reasons. 
• Compensatory off: Employees are eligible for compensatory off for additional days/hours they worked in holidays.
• Maternity leave: How many leaves can a new mother take? As per the Maternity Benefit Act 1961, a working woman is allowed a paid maternity leave of 26 weeks for the first two children and three months for subsequent children. 
• Paternity leave: How many leaves can new fathers take? There are no laws related to parental leave. Typically, employers offer 15 days of parental leave in India. 
• Leave without pay: If an employee exhausts all the leaves, how much additional leave without pay can they still take after which they would be up for termination?

Tip: Do go through the Factories Act 1948 before drafting the working hours and leave policy.

5. Wages and Timekeeping

Managing employee payroll is a crucial aspect of legal compliance. In the wages policy, you can define:

• Minimum wages: Indian labour laws already state minimum wages, but it's better to check market norms and minimum wages for every role. 
• Payment frequency: How frequently should employees get payments: weekly, bi-weekly or monthly? Monthly payments are the most common. You can also define on which day an employee will get the salary: 1st working day of the month, last working day of the month or any particular date of the month.
• Overtime pay: How do you keep track of time and how much overtime pay will employees get for working additional hours?
• Deductions: What are the deductions in the salary? Standard deductions are advance tax, professional tax, provident fund, gratuity fund and health insurance premium. 

6. Employee Benefits 

You have to offer benefits as per the market norms and labour laws. Top benefits offered by employers which you can mention in the benefits policy are:

• Provident fund: Employee provident fund is a retirement scheme for employees. Both employee and employer have to contribute 12% of salary monthly.  
• Gratuity fund: Employees get an incentive for continuing with an organisation for more than five years. They get 15 days of additional pay as gratuity for every year of service.
• Health insurance: Most companies give health insurance to employees and dependents. Typically, employers pay for the employees. It's the employer's choice whether or not to pay for the dependents.

7. IT and Data Security 

IT and data security policies are essential to meet compliance requirements and prevent security breaches. You can define guidelines related to:

• Usage of company internet, email and software
• Confidentiality of company data
• Usage of personal devices in the office: laptops, smartphones, tablets, Universal Serial Bus (USB), etc.

8. Non-Discrimination 

Non-discrimination policy ensures employees are safe from bullying, harassment and discrimination regardless of age, race, colour, religion, gender or sexual orientation. Important conditions of the non-discrimination policy are:

• Equal employment opportunity: You must give equal employment opportunities to all employees regardless of age, race, colour, religion, gender or sexual orientation.
• Prohibited discrimination and harassment: Discrimination or harassment in any form based on age, race, colour, religion, gender or sexual orientation should be prohibited.
• Prevention of sexual assault: You must follow Prevention of Sexual Harassment (PoSH) guidelines in India to create a safe working environment for women. 
• Grievance redressal: How can employees report any discrimination, harassment or assault? Also, what would be the process to address these grievances? 

Tip: The Government of India also provides a handbook on preventing sexual harassment of women at the workplace. You can go through this before forming the policy. 

9. Performance Management and Appraisal

The performance management policy gives a framework for assessing employee performance: frequency of appraisals, rating system and review process. The policy creates transparency for employees on how their performance will be evaluated. Lastly, the policy will also outline how you will address performance issues. Will employees enter any performance improvement program (PIP) or what will disciplinary consequences be for not meeting performance expectations?

10. Rewards and Recognition

A rewards and recognition policy motivates employees to bring their best foot forward. The policy encourages employees to do great work by transparently mentioning:

• Types of rewards or incentives they can get for outstanding performance
• Criteria for selecting employees for rewards
• Processes by which they can claim any rewards. 

11. Claim Reimbursement

A claim reimbursement policy gives a detailed procedure by which employees can claim for any business or travel expenses. The policy mentions:

• Reimbursable expenses
• Claim application and approval process
• Reimbursement timeline. 

Stay Compliant With Rapid

Rapid is an employer of record (EOR) with deep expertise in India. We help you onboard employees in India compliantly without going through the trouble of building any local entity. 

Using Rapid, you can:

✅ Quickly generate locally-compliant employment contracts by just filling in a few employee details. 

✅ Efficiently manage the entire payroll and also get in touch with tax filers through our internal marketplace.

✅ Easily create a company holiday calendar and approve leaves.

✅ Conveniently track timesheets and avoid manual record-keeping

✅ Effortlessly offer localised benefits without spending days on research.

✅ Customise incentive programs according to your specific business needs

✅ Smoothly integrate with your existing Human Resources Management System (HRMS) and manage employee data and performance reviews in one place.

Book a demo now to ease out your Indian team expansion.