7 Human Resource Policies for Your Indian Business

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Whether you own a small-scale startup or a multi-million dollar firm, compliance with human resource policies is essential. The HR department establishes the procedures, codes of conduct, and other rules and regulations that the employees have to adhere to.

If you wish to establish a business in India, it is important to understand the common HR procedures in the country. HR defines an organization’s vision and style of working. In India, HR regulations play a major role in establishing answerability and accountability among employees. Here are some of the crucial HR policies for business in India:

Employment Contracts

There is no legal requirement in India for employees to sign contracts with local employees. Nevertheless, this documentation is important and highly recommended.

Employee contract is a broad term that refers to all employee-related agreements. As Indian employment laws are diverse and detailed, having employment contracts in place is quite useful. Vital laws to adhere to include labor laws, wage laws, the Contract Act of 1872, and the local state’s employment laws.

In India, both the provincial and federal governments form and implement laws regarding employment, which can make compliance seem complex at first for foreign firms. When operating a business in India, make sure your HR managers keep the employment contracts updated to prevent difficulties in the future.


As an employer, you must regularly audit your wage structure so that it continues to be competitive in the local market. It is even more critical to ensure that the wages are compatible with the current laws of the land.

The Minimum Wages Act, 1948 establishes the minimum wages that must be granted to skilled and unskilled workers, which must be taken into account by all foreign firms operating in India. Furthermore, the Code on Wages Bill, 2019 was passed to allow the federal government to determine the minimum statutory wage.

Another important law to keep in mind when expanding your business to India is The Equal Remuneration Act, 1976. As per this mandate, it is unlawful to discriminate between men and women when it comes to salaries.

Wages below the minimum limit are considered forced labor, which is illegal as per the Bonded Labor System (Abolition) Act, 1976. When you set up a company in India, make sure you are well aware of the laws regarding remuneration for employees.

Code of Conduct

This pertains to the vision, mission, values, and ethics of your organization. A solid code of conduct should be established to ensure a healthy business environment.

The code of conduct comprises the rules and regulations that all employees must adhere to. Equal rights policy, dress code, electronic usage policy, media policy, conflict of interest, and healthy work environment are some of the significant policies included in the corporate code of conduct in India.

The senior management of your organization must comply with the company rules and regulations and act in a way to boost the company’s reputation. Employees shall also ensure that they maintain a culture of compliance and integrity in the organization.

Leave Policy

A proper leave policy must be present to give your employees a clear idea about the number of days off they can take each year. The public holidays should also be explicitly stated, along with the percentage of salary that would be deducted in case of half-days or unpaid leaves.

There are 3 national holidays observed in India, during which no company is allowed to stay open. Nevertheless, organizations like hospitals, travel agencies, and factories are exempted from this rule and can operate 24 hours a day.

However, according to the Factories Act, 1984, the employees must be paid for those days. Moreover, each company is required to have an annual list of leave days that the employees are entitled to.

Termination of Employment

It is important to have a written employment contract so that you have proper rules in place when it comes to major decisions like termination. Employees working in your organization in India can only be terminated according to the terms and conditions mentioned in the employment contract.

Moreover, as a business owner, you must also ensure you are complying with the federal and state labor laws when laying off workers. The terms and conditions in the company contract cannot contradict legal statutes.

In India, termination without prior notification is prohibited. The termination periods usually differ by function and employment length.

Policy for Harassment at Work

Sexual harassment is a major issue, which is why there are legal requirements in place to ensure that your workplace offers a safe environment for women. The safety of women within an organization is not just a legal duty, but also a moral obligation.

The Sexual Harassment Act, 2013 was well-drafted and led to the shutdown of various companies that failed to comply with it. The act is designed to not only safeguard the interns and employees in an organization but all women who visit the premises, including customers.

According to the act, a company with more than 10 employees must establish an Internal Complaints Committee.

Adaptive Work Culture

Employees in India are letting go of the conventional 9 to 5 hour-pattern towards a more holistic kind of career path. Organizations in India are slowly adopting the idea of work-life balance into the daily lives of their employees.

HR departments must be responsive and adaptive in order to enhance organizational values which strike the right balance between productivity and employee satisfaction. Indian multinationals are increasingly opting for flexible timings and work-from-home options to improve employee retention and loyalty.

Final Thoughts

HR policies for business in India need to be updated so that you not only meet the legal requirements but also stay competitive with your peer employers. A healthy work environment will increase productivity, loyalty, and satisfaction among your employees. For further insight about expanding to different markets around the globe, click here to explore our website.

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