This article was authored by Apoorva Mandhani.
The roles attributed to Human Resource professionals have transformed greatly over the past few years, owing to the changes in the society, government, culture, technology, and the legal landscape impacting employers and employees within a workplace. For instance, the #MeToo movement was a wake-up call for a healthy work environment, with growing emphasis on the need for following the Prevention of Sexual Harassment at Workplace Act to the T. Further, from the growing awareness and consequent demand for equal wages, to the enhanced need for employee welfare owing to the high attrition rates, HR professionals have had their hands full.
Amidst all this commotion, before the start of a new year, here is a round-up of the legal documents that every HR professional must know how to draft:
This is perhaps the most intensive class of documents that an HR professional must know how to draft. There are several employment relationship principles, laws, rules and regulations that an HR professional is expected to navigate through, in order to avoid any heavy penalties or harms to the organisation’s reputation. This involves having policies in place, for ease of reference as well as certainty in the implementation of the laws. Here is a non-exhaustive list of such documents:
- Recruitment policy
- Social media policy
- Customer engagement policy
- Data protection policy
- Intra-company dating policy
- Employment handbooks
- Overtime policy
- Reimbursement policy
- Appraisal policy
- Equal opportunity policy
- Leave policy
- Grievance redressal policy
- Drug and alcohol policy
- Health and safety procedures
- Internet and email policy
- Disciplinary proceedings policy
- Equipment usage policy
Schemes and benefits
Employee benefits significantly contribute to attracting and retaining employees—a must in times when companies are struggling with methods to lower attrition rates and retain their best minds. It is also important for these benefit terms to be drafted in a tight language, in order to maintain clarity about the rights and demands of employees on one hand and the duties and liabilities of the employer on the other hand.
The most basic of these benefits include provident fund, gratuity, bonuses, health benefits, wellness programmes, paid leaves, child care leaves, pension, sabbatical benefits, travel allowances, legal public holidays, night shift allowances, medical bonuses and voluntary retirement benefits. For reference purposes, here is a list of laws that may be referred to, in order to ascertain the features of such schemes and benefits:
- The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
- Payment of Gratuity Act, 1972
- Maternity Benefits Act, 1961
- Employees’ State Insurance Act, 1948
- Employees’ Deposit Linked Insurance Scheme, 1976
- The Workmen’s Compensation Act, 1923
- 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 Payment of Bonus Act, 1965
A few companies are also trying to up their game when it comes to providing benefits to their employees. For instance, companies have begun providing adoption and surrogacy leaves to parents, giving them time to take care of a newly born child, irrespective of the fact that the child wasn’t actually born to them. Companies also provide marriage leaves, paternity leaves and reduced workload for mothers who rejoin the workspace right after their maternity leave.
Therefore, at a time when these benefits may decide whether a future industry star joins your company or your competitor’s, it becomes extremely important to keep evolving the benefits offered by your company as well as maintain the certainty around them.
While oral agreements are valid, an employment agreement needs to be in writing for all practical purposes. This agreement should contain all terms agreed to between the employer and the employee and should also be compliant with the statutory requirements. Largely, an employment contract should contain the terms and conditions surrounding:
- Job designation
- Job description
- Place of working
- Probation period
- Confirmation procedure
- Work hours
- Salary and other benefits
- Non-compete and confidentiality
- Dispute resolution mechanisms
Besides, these agreements are different for entry-level employees, lateral hires, contractors, and consultants, with terms and conditions of employment needing to be tweaked according to the stage of such hire. This agreement also differs for secondments or for laying down an understanding of retention bonuses. The written word, of course, brings in more clarity on the relationship between the employer and employee, going a long way in avoiding disputes and disagreements.
Record of proceedings
HR professionals need to maintain an error-free record of disciplinary proceedings against employees. Of course, this is to ensure that the proceedings are blemish-free and survive any future scrutiny. There should be a record of all the stages of the procedure: the complaint; employee’s defence; findings made; actions taken with detailed reasons; any appeal and its outcome; any grievances raised during the procedure; any subsequent developments; and notes of any formal meetings.
A proper paper trail comes in really handy, especially when a dismissal leads to Tribunal proceedings. Not just does it inspire confidence in the mechanism adopted by the company, but also goes a long way in establishing that the employee was treated with all fairness.
Exchanges and communication with the labour union
Maintaining healthy and cordial relations between the employer and the labour union contributes significantly to the productivity and overall functioning of an organisation. And it is the HR department that is usually entrusted with the task. It is these professionals who need to act as buffers between the two parties, aiming to resolve a dispute internally and as quickly as possible, to avoid loss of time and money for the organisation.
In addition to the laws listed above in the “Schemes and benefits” section, here are a few other labour laws, the compliance with which needs to be taken care of:
- Indian Factories Act, 1948
- Child Labour Act, 1986
- Trade Unions Act, 1926
- Industrial Disputes Act, 1947
- Minimum Wages Act, 1948
- Payment of Wages Act, 1936
A show cause notice needs to be issued when the management believes that there exist sufficient reasons to terminate an employee or caution them in an official manner. Issuance of such notice is an absolute necessity when it comes to disciplinary proceedings, as it constitutes communication of the alleged wrongdoing to the employee and a chance to set things straight.
Writing such notices would often be the job of HR managers though occasionally lawyers may be called in.
The reasons for issuing such notice are usually (and are desired to be) spelled out in the employee handbook.
Termination letters and exit memos
Drafting of termination letters is a whole different category specifically because it ensures that the separation of the employee is hassle-free as well as commitment-free, with all dues paid and all concerns answered.
Additionally, they also need to reiterate an employee’s obligations under his employment agreement through an exit memo at the time of full and final settlement. For instance, these may remind an employee of the confidentiality of the company-specific information that they may have acquired during their employment. These may also remind the employees of any restrictive covenants that they might be under for a certain amount of time after leaving the job.
Writing an exit memo is a critical task that all HR managers should learn about.
HR professionals need to keep their seniors in the loop on its dealings with the employees. This could be in the form of fortnightly, monthly or six-monthly reports, or all of these, depending on the company policy. While a lot of the HR’s functions and responsibilities might be in collaboration with other departments, such as managing recruitment with senior personnel, it might not always be the case. For instance, grievances between employees might exclusively be informed to and tackled by the HR professional. However, it becomes imperative to keep a record of such handlings in a report, detailing the steps taken, right from the factual situation to the investigative process and the decision arrived at or suggestions given.
Besides, these timely reports can easily be utilised over a period of time to examine metrics such as organizational culture; diversity and inclusion; talent and development; talent acquisition; compensation and benefits; and managing change. In fact, HR leaders can also use such communication to highlight the value of their programs or investments, and their impact on the growth of the company, in terms of enhanced productivity of employees due to improved work environment and benefits.
Industrial disputes spell trouble for everybody involved—from the employees to the organisation and the economy at large. Therefore, it is imperative for HR professionals to not just have preventive systems in place and wrap up any disputes as quickly as possible, but also to document the final settlements in a way so that these can be referred to and utilised as precedents for all those involved. Here is a list of the mechanisms that can be used for such settlements:
- Collective bargaining: As the name suggests, collective bargaining involves resolving disputes through a meeting between the representatives of a labour union and representatives of the organisation’s management.
- Code of discipline: A code of discipline can be put in place, in order to define the rules and responsibilities of employers and employees. This is usually done through the standing orders which HR managers must be proficient with. They not only need to draft it but also need to get it legally recognised through the labour department and then amend it from time to time as required.
- Grievance procedure: A set grievance redressal mechanism also needs to be put in place, with certainty on the initiation of the redressal process, representation for each party, the steps involved and the penalties/reliefs that may be provided.
- Arbitration or conciliation
- Adjudication by way of labour courts or a tribunal.
- Consultative machinery: This involves the settlement of disputes with the help of the consultative machinery set by the government at the plant, industry, state and the national levels.
General HR documents with legal implications
This brings us to the end of our list, with a round-up of the general documents that might have legal implications for the company as a whole, in case of a dispute. These include offer letters, appointment letters, confirmation letters, increment letters, promotion letters, experience letters and other communications such as that of an appraisal.
For instance, an offer letter sets the expectations on the scope of employment for a prospective employee as well as the ways in which this scope will play out. It also lists down the benefits that the employee would be entitled to, therefore minimizing future claims on the issue.
If you’re an HR professional or aspire to be one, you must check out this course on Lawsikho, that could help you get a better grip of labour and employment law, coupled with industrial law—learnings that could definitely provide you with better tools to manage your legal responsibilities as an HR manager efficiently. We have trained hundreds of HR managers till date, and know exactly what you will need to learn.