LAWS THAT EVERY HR MANAGER SHOULD KNOW IN INDIA

This article on Laws that every HR manager should know in India is written by Ravikant Deshmukh pursued M.A. in business law from NUJS, Kolkata.

“Human resources are like natural resources; they’re often buried deep. You have to go looking for them, they’re not just lying around on the surface. You have to create the circumstances where they show themselves.” 
― Ken Robinson

The above statement by Steve and Ken correctly defines and also states the purpose of an HR manager. Yes! Exactly they are the one who runs the business. Employees of an organization works efficiently if an HR manager is dedicated and sincere towards his/her work, therefore, one need to find the best possible person to be an HR in Company.

As when we read the wordings of Flippo HRM is a person who manages each and every step of Company.  Any wrong decision can lead to a difficult situation in future. Earlier when one joins the Company one needs to be aware of specific laws which is essential for every Business but now the scenario has been changed with laws one should also take care of the needs of an organization emotionally to.

But before getting into the emotional part let me tell you about the fully legal aspect of an HRM. As a legal Auditor in a Company named Chess management Private Limited based in Gurugram, I was a bit lucky to be a part of auditing team for Jindal Kosi Plant and Galaxy Surfactant Mumbai. So here what I am sharing is the practical description.

As discussed who is HRM?

Now the point comes what is HRM? Ask yourself, accordingly HRM work is just to dispense salary or they are just in the company to take leave applications or they are just the medium between the top management and the lower management for the purpose of communication.

Above all points are right they play a vital role in each and every decision of the company but the mentioned work is only the minute part of their job.

If you will ask me I would say that, “HR manager is the one who helps the company in achieving their future Goals / Dreams and to avoid any distorted decision, a situation which can act as a stumbling block to the company.”

For example: If an HRM recruits the person on the basis of CV but the recruited person aims or his view does not match with the companies Goal then that is the sheer waste for management.  Same goes with the compliance of Law from now POSH (Prevention of Sexual Harassment Act) is compulsory for every company where a women works if at any point of time you are not complying with this, then even company registration/license can be cancelled by the Government.

Thus one can say that for compliance purpose HRM should know that company should be updated with the laws either by consulting their Legal managers or now a day’s company hires the person as Manager who are lawyers too.

HR laws start from the entering of the gate to the exit point, for upper management to the lower management, from peon to Director everything needs to be taken care off so that there is no confusion between the individuals.

Thus now it is clear that besides the other work that is achieving the object of the company the most important part is to comply with the laws under which the company falls through the list is endless but still I will try to give you a brief introduction of laws which are important for an HR manager.

Before getting into laws let us see some areas where HR manager plays an important role.

If we started explaining each and every law for HR manager then it would be difficult to explain as the area covered by them is very large the above-mentioned areas are now the quick look.

Just to make it easier, let’s separate the same into three parts:

1. RECRUITMENTS( there are no such laws for recruitment process but industry follows certain norms which needs to be followed by the companies )
2. PAYMENTS/HOLIDAYS
3. RULES AND REGULATIONS

RECRUITMENT PROCESS

What are the necessities relating to marketing positions?

Under the Employment Exchange (Compulsory Notification of Vacancies) Act, 1959, if the state so requires, a private sector establishment with 25 or more employees must inform vacancy to specific employment exchanges. Most of the time this is ignored by the companies order to avoid the rush.

Background checks:

There are no specific laws for the same

This is the most important part in US legislation as there are many Private agencies which goes for the Background check but in India HRM eventually ignore this in private sector but in Govt. sector it plays a vital role.

What can employers do with regard to background checks and inquiries in relation to the following?

(a) Criminal records

Although it is practical to conduct criminal background checks, this is exceptionally complicated in practice since criminal records are not digitized and are not consolidate countrywide. Accordingly, where a criminal background check must be carried out, this is typically done at the police station with jurisdiction over the employee’s current place of residence or wherever that he or she has lived for a sound period.   

(b) Medical history

Employees’ medical histories cannot be accessed easily since these are not digitized and there is no repository of medical records. Employee consent is required to disclose medical records to the employer. However, some employers require employees to undergo medical checks and have the diagnostic centre send the report directly to the employer. Subject to certain specific restrictions (e.g., pre-employment testing for HIV is not permitted), there is no prohibition against this practice under Indian law. 

(c) Drug screening

Indian law does not ban drug screening.  

(d) Credit checks

A person is entitled to obtain information on his or her credit rating. The employer can also access this information, with the employee’s permission and on providing necessary proof of identity. Access to credit rating information is more general in banks and financial institutions.

(e) Migration status

Indian law does not specifically require an employer to check the migration status of a foreigner. Indian law does not prevent the employer from checking whether a foreign employee holds the necessary visa to work in India. If a foreign individual on an employment visa wishes to change employment to another company, he or she must leave India and apply afresh for a visa. The only exception is where the foreigner is changing jobs between a registered holding company and its subsidiaries or vice versa or between subsidiaries of a registered holding company. In such case, the foreigner may not need to leave India, provide that he or she fulfils specific criteria, including obtain prior government approval for the change in employment.

(f) Social media

There is no bar against conducting background check through social media.

(g) Additional

The most general background checks undertaken are of educational qualifications. The employee must consent to this and the employer (or an outsourced provider) will then write to the relevant institution request confirmation. The institution may charge a fee for providing this information. Most institutions have a procedure in place in this regard. 

Now the part comes the statutory audit which contains more than 20 laws as the topic specifically states that Laws that every HR manager should now. So here it is only the introduction of the Act without stating any compliance part. Here most of the Act is under the central but the rules are of states thus one has to keep in mind this thing.

While reading this act the most important points for an HRM to check out are:

1. Applicability of Act- as to whom it is applicable Factory / Shop and establishment, to workmen, employer, employee.
2. Definitions – As every single word may be interpreted by law can be in different way in respect whatever may common men interpret. This is the most vital part before starting into the compliance part.
3. Registration.
4. Renewal of Registration.
5. Fees.
6. Maintaining of Registers/Muster roles.
7. Display.
8. Penalty

So here are some important Acts which every HR manager should know:

• The Factories Act – 1948

The law is created to safeguard the rights and interest of workers from any form of exploitation by the factory owners.

According to this labor law factory owners and employers have to guarantee certain working conditions to their employees.

Like sanitation, proper ventilation for air and light, machinery and other instruments must be good condition, there is must fire fighting instruments.

The maximum working hour should not be more than 48 hours a week. Weekly holiday is necessary. You should be aware of this.

• The Employees Provident Fund Act – 1947

The Employees’ provident Fund 1952 is enacting to make available a type of social security to the industrialized employees. The Act is valid for every employee employed in a factory or in association with the work of a factory or other establishment covered by the schemes other than an excluded employee is entitled are required to become a member of the fund from the date of joining the factory or establishment. You get the benefits like retirement pension, medical care, housing, family obligations, education of benefits and financing insurance policy.

The law would ensure the rights of elderly people so that they don’t have to bother about their life after retirement. If you have a problem with the employer then this act will protect you.

• The Apprentices Act – 1961

The Apprentices Act came in the year 1961 and the reason is that to improve the old skill by theoretical and practical training in the industry.

Here you are allowed to take casual leave of 12 days, medical leave of 15 days and extraordinary leave of 10 days in a year. You need to work 42 to 48 hours a week. Hence, you should know this if you are an apprentice.

• The Maternity Benefit Act – 1961

Maternity benefit act is of great benefit for a woman. Now they do not have to worry about maternity leave because this act protects them. The Maternity benefit act aims to protect the dignity of motherhood and of a new person by providing payment for full and healthy maintenance of the women and her child at the maternity time when she is not working. An Act to regulate the employment of women in certain establishments for certain periods before and after childbirth and to provide for maternity benefit and certain other benefits. Every pregnant working woman is eligible for health care, maternity leave and other benefits if she has worked for at least 80 days. They will do light work for 10 weeks after joining again. If the employer fails to do then the company or employers could be imprisoned.

• The Workmen’s Compensation Act – 1923

This act was passed for circumstances where an employee has to give compensation because he or she got injured in an accident while working.The Workmen’s Compensation Act 1923, it intends in providing financial protection to workers and their dependents in the form of compensation, in the case of accidental injury.

If you are working aboard for the company then also you are eligible for Workmen’s Compensation Act. I the employer is not able to pay then he is liable for a criminal offence.

• The Payment of Gratuity Act – 1972

Every employer has a right to obtain gratuity under the Payment of Gratuity Act – 1972. Gratuity is a part of salary received by employees from their employers as gratitude for the services performed by the employee in the employment tenure.

It is one of the many retirement benefits that employers gives employees at the time of leaving the company You have to complete one year of service for the purpose of gratuity in case of his or her death.

Wages shall consist of basic and DA. You have to know about this law so that if something goes wrong then you could be protected.

• The Payment of Wages Act – 1936

The Payment of Wages Act formulated in the year 1936. The Payment of Wages Act aims at avoiding avoidable delay of payment of wages without any deduction from the wages. It was formed to make sure the wage that an employee gets should be in time. Employers cannot take away any money and they have to pay compensation every month in time. If you are not paid by the employer then employer could be put in prison. Even if you are terminated by the employer you are eligible for the salary you worked for that particular month.

• The Industrial Disputes Act -1947

If you have a dispute with your employer then you could settle peacefully through legal means. Here employer has to give a notice before they fire an employee. At least six weeks of time must be given. You could also talk about your wages, holidays and working hours with your employers. You can settle disputes with your employer peacefully by negotiating or taking to court.

• State Wise Factories and Establishments (National, Festival and other Holidays) Act,  read with State wise Factories and Establishments (National, Festival and Other Holidays) Rules:

The national and state leaves are decided by this act because every state has its own cultural value which leads to the celebration and thus they decide as per their convenience.

• The Payment of Bonus Act – 1965

This act protects rights of employees in certain industries. The Payment of bonus Act 1965 aims at providing bonus to employees of certain establishments, as a part of profit or productivity or production and for connection with the employees.Every employee receiving salary or wages up to Rs.15,000 per month and engaged in any kind of work whether unskilled, skilled, high skilled, supervisory etc. is entitled to the bonus for every accounting year if he has worked for minimum 30 working days in that year. Within the time period of one year, you have right to claim bonus payable under the act. Hence you should make the best use of it. Awareness is very important if you want to know your rights.

• The Employees State Insurance Act – 1948:

This act ensures benefits for employees who are sick and got injured while they were working. ESIC is a self-financing security and health insurance scheme for all Indian workers. For employees earning 15000 or less per month, the employer contributes 4.75 % and the employee contributes 1.75 % with a total contribution of 6.5 %.The ESIC scheme provides medical benefit for employees and their families. Sickness and maternity benefits for employees.The ESIC scheme also provides dependents benefit for dependents in case of death due to employment injury. Employers need to deduct and deposit the money every month in the employee’s account. They also need to grant leave to the insured employees on the basis of sickness certificates. The employer has to cover the expenses in case of funeral or other tragedy to its employees.

• Professional Tax:

It is the tax charged by the state government of India. Every Indian earning income in the form of salary or any other profession has to pay profession tax. Profession tax slab differ from state to state in India. However, not all state imposes tax. The following states have levied Professional tax – West Bengal, Karnataka, Telangana, Andra Pradesh, Maharashtra, Gujarat, Tamil Nadu, Chhattisgarh, Assam, Kerala, Orissa, Meghalaya, Tripura, Bihar, Jharkhand and Madhya Pradesh. The owner of the business has to furnish a return to the tax department within a specific time in the prescribed format. The return should also include tax payment proof.

RULES AND REGULATIONS

After the compliance, there are certain set of Rules/ Regulation which has to be followed by every company in respective of state. These are the newly legislation which have been made compulsory.

• POSH( Prevention of Sexual Harassment Act )

The ambit of the Sexual Harassment Act is very wide and is applicable to the organized sector as well as the unorganized sector. In view of the wide definition of ‘workplace’, the statute, inter alia, applies to government bodies, private and public sector organizations, non-governmental organizations, organizations carrying on commercial, vocational, educational, entertain mental, industrial, financial activities, hospitals and nursing homes, educational institutes, sports institutions and stadiums used for training individuals. As per the Sexual Harassment Act, a workplace also covers within its scope places visited by employees during the course of employment or for reasons arising out of employment – including transportation provided by the employer for the purpose of commuting to and from the place of employment.

In addition to ensuring compliance with the other provisions stipulated, the Sexual Harassment Act casts certain obligations upon the employer to, inter alia,

1. Provide a safe working environment.
2. Display conspicuously at the workplace, the penal penalty of indulges in acts that may amount to sexual harassment and the composition of the Internal Complaints Committee.
3. Organize workshops and awareness programmes at regular intervals for sensitizing employees on the issues and implications of workplace sexual harassment and organizing orientation programmes for members of the Internal Complaints Committee.
4. Treat sexual harassment as misconduct under the service rules and initiate action for misconduct.

• Child Labor Regulation

In Indian context this is the most important point for an HR manager. As the government is now much more liberal as compare to earlier days on Child labor with amendment in 2016

The Union Cabinet has approved amendments to the Child Labor (Prohibition and Regulation) Amendment Bill that would:

• prohibit (with certain limited exceptions) the employment of children below the age of 14 in all occupations and processes,
• allow children to help family or family enterprises in nonhazardous occupations after school hours or during vacations,
• allow children to work in the entertainment industry subject to compliance with prescribed conditions and
• Significantly increase penalties for employers found in violation of child labor laws.

Above mentioned laws are the important ones which need to be complying by the HR managers to run a company. The list is too long to explain but yes the above-mentioned law if complied then I am sure that they would not fall under the penalty for non-compliance. As when we went to auditing to the companies HR laws where the most non- complied because it is vast and moreover the development in the sections are not according to the time we needed, Sometimes some sections makes it useless, even for us to state that you do not comply with that particular section.

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