Setting Up an HR Department: Legal Essentials for Growing Businesses

Start with the right documents

• Appointment letter or employment contract stating role, pay, probation, notice period and place of work
• Confidentiality and non-disclosure terms
• Employee records: identity, address, qualifications and nominations

Put core policies in writing

• Leave and attendance policy
• Code of conduct and disciplinary procedure
• Prevention of sexual harassment policy
• Expense, travel and use-of-company-property policy
• Grievance redressal mechanism

Know which laws apply to you

Applicability depends on the number of employees, the nature of work and the state. For example, the Employees’ Provident Funds scheme generally applies to establishments with 20 or more employees, and ESI generally to establishments with 10 or more employees in notified areas. Central labour laws have been consolidated into four Labour Codes; the current state of notification and Bihar rules should be checked at the time of setup.

POSH Act compliance

Under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, every employer with 10 or more employees must constitute an Internal Committee, which must include an external member. Smaller workplaces are covered through the Local Committee constituted by the district. Policy, awareness and annual reporting are also required.

Registrations and records

• Registration under the Bihar Shops and Establishments law, where applicable
• PF and ESI registration when thresholds are met
• Statutory registers of wages, attendance and leave
• Display of statutory notices at the workplace

Handle exits carefully

Termination, resignation and full-and-final settlement should follow the contract, the policy and the law. A documented, fair procedure is the best protection against later disputes.