Laws and Regulations Every HR Professional Should Know

 

Human resources (HR) professionals are responsible for strategically managing employees within an organization while remaining compliant with laws that govern employee rights and employer obligations. If an organization violates these complex and ever-changing regulations, it exposes itself to risk, including lawsuits, financial losses, and reputation damage.

HR roles are not one size fits all. Depending on the title, an HR worker’s responsibilities can vary significantly. Some HR managers are solely responsible for staffing, others concentrate on employee development, some deal strictly with compensation and benefits, and others — the generalists — do it all.

“But regardless of individual job function,” Hyde says, “compliance is a key responsibility of every HR role. The law touches every profession that falls under the HR umbrella in some way.”

These professionals are tasked with frequent on-the-spot decisions that can have severe legal consequences, so knowledge of common HR-related laws gives these industry workers the confidence to make these decisions or know when to contact outside counsel.

HR professionals with legal expertise also have a competitive advantage in the workplace, as they can proactively minimize a company’s exposure to legal risk. With a working knowledge of current laws and their real-world applications, they help companies remain compliant and avoid unnecessary claims while also protecting the rights of valued employees.

1. Sexual Harassment (Prevention, Prohibition and Redressal) Act, 2013

The 5-year-old act has taken the private business sector by storm over the last few years. In most cases, HR managers are the first recipient of a sexual harassment complaint. They are also actively involved in the drafting of Sexual Harassment Policies and the formation of the Internal Complaints Committee. HR managers are also responsible for the performance of the Internal Complaints Committee. What if the committee completely botched up a hearing? Would that reflect well on the company or the HR manager? Hence, even if the HR manager is not part of the sexual harassment committee, he or she should have a good understanding of the law, compliance, and procedures involved.

Here is a quick test to see if you know enough about the sexual harassment law. It is a basic question. Answer it for yourself. Which of the following people are not covered by the sexual harassment act?

1. Women consultants
2. Women customers
3. Women contract workers
4. Women interns
5. Women visitors to the office who do not belong to any of the above categories

What did you choose? Well, all of those people are covered by the sexual harassment act.

If you could answer that correctly, you probably already know about the hairy issues that arise out of this act. If you didn’t know, please note that this lack of information could lead to serious problems, as many HR managers have been discovering.

1. The Factories Act, of 1948

Factories are often equated with labor issues and inspector raj. Be it for numerous compliances or any regulations related to working conditions, knowledge of this act is necessary for HR managers. More and more large companies, especially MNCs are now approaching consultants and training institutes that can train their HR managers about Factories Act compliances, though it is not for the course for SMEs and family businesses yet.

At iPleaders, we have worked with several large companies in this domain. If you work in an organization that deals with manufacturing or has factories, then you need to know about this act whether your organization takes the initiative or not.

Individual HR managers who want to learn about Factories Act will be better off taking up a university-certified labor law course. Some organizations like the Indian Railways even reward employees who earn a diploma or recognized certification in this area.

This act prescribes the basic rights and interests of the workers, and the guarantee to provide them with basic amenities like proper sanitation, ventilated workspace, safety for using machinery, etc. The maximum working hours prescribed are not more than 48 hours a week. Compliance with this act can act as a boon for this company as it can effectively avoid labor conflicts in the future.

1. The Employees Provident Fund Act, of 1947

This act is aimed at providing a kind of social security to industry employees. If you have an employee who is working in your factory or in association with the work of your factory, he is entitled to become a member of this fund. The benefits like retirement pension, medical care, housing, family obligations, education and benefits arising out of insurance, and rights of older employees post-retirement, are a few aspects that are covered under this act.

1. The Apprentices Act, of 1961

Do you know what apprentices are?

What if your company hires apprentices and does not give them the required benefits?

Can an intern be an apprentice?

As per the Oxford dictionary, an apprentice is a person who is learning from a skilled employer, having agreed to work for a fixed period. If your organization offers apprenticeships then you need to make the policies for them as per this act. The act allows you to take casual leave for 12 days, medical leave of 15 days, and extraordinary leave of 10 days in a year.

1. The Maternity Benefit Act, of 1961

The maternity benefits act is perhaps the most known act on this list. This act is aimed at providing full benefits and protection to the mother and the child during the time of maternity in the form of paid maternity leaves. However, let’s try to understand how much you know about the provisions.

Do you know the number of days a pregnant woman should have worked in your organization to claim maternity benefits?

Do you know that she cannot resume the same kind of work she used to do before pregnancy?

If a pregnant woman has worked in your organization for 80 days, she is entitled to maternity benefits under the act. The act also provides for the provision of light work, up to 10 weeks, after she resumes work.

1. The Workmen’s Compensation Act, of 1923

If you are an HR you need to know the kind of liabilities your organization might have in case of any labor accident. Although, there are security departments in the factories which ensure that every individual is following the safety guidelines, however, as an HR it is your responsibility to ensure that the necessary tools and equipment are provided and complied with. You need to know that all of the regulations and guidelines are created in adherence to this act so that unnecessary future liabilities can be avoided.

So what is this act?

It is an act aimed to provide financial protection to the workers or their dependants, in case of an injury or accident at the time of work. It provides financial compensation in the case of any such accident. In case of non-compliance, the employer is liable for a criminal offense.

1. The Payment of Gratuity Act, 1972

Gratuity is a part of the salary, received by the employees from their employers as a token of gratitude for the services performed by them during their employment tenure. It is one of the many retirement benefits that they are entitled to.

An employee is entitled to gratuity if he/she has completed one year of service in an organization. The HR manager is required to know about this act so that in case of the unfortunate death of an employee who has completed one year of continuous service in a company, or in case of retiring individuals, a basic gratuity is awarded.

1. The Payment of Wages Act, 1936

As an HR it is your responsibility to see that the due wages are credited to the workers every month and without unnecessary deductions. This act is a guide to ensure that any such discrepancies can be avoided.

This act provides standards for assessing the remuneration of the employees and ensures that the salaries are governed as per the industry standard. This is an act meant to give you and your employee equal bargaining power.

1. The Industrial Disputes Act, of 1947

Right from the cap on working hours to the provision of conciliation between the company and its employees, this act has all of it covered.

Intending to settle employer-employee disputes amicably, it is a tool for a peaceful resolution. It is of utmost importance for you to ensure that the employee is given at least a six weeks notice before getting fired. Mostly the issues such as wages, holidays, working hours, etc, or anything that can cause a dispute, which must be adhered to form a part of the act.

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

While deciding on the leave policy, you are required to consciously comply with these rules. These rules decide the national and state leaves which are based on the religious and cultural beliefs of a particular state. As an HR it is your responsibility to ensure that the cultural sentiments of any employee are not hurt and their happiness quotient in your organization is on a constant high.

1. The Payment of Bonus Act, 1965

Do you know which employees are entitled to a bonus?

Are the employees on a higher pay scale entitled to more bonuses than others?

How many times is an employee entitled to a bonus?

As the name suggests, this act is aimed to provide a bonus to the employees of certain industries and establishments. Every employee, irrespective of skilled or unskilled work is entitled to a bonus every accounting year if his salary is above 15,000 and he has worked for a minimum of 30 working days in a year.

1. The Employees State Insurance Act, 1948:

This statute acts as a self-financing security for every employee in India. The employer is required to contribute 4.75% of the 6.5% of insurance to all employees who are earning 15,000 or less per month. This act provides health and medical benefits to all the employees and up to 6 dependents of the employees. In case of a tragedy, funeral, accident, medical contingency, injury, maternity, or sickness, an employer is required to cover the expenses through insurance as per this act.

1. Child Labour Regulations (CLR)

One of the most important regulations, the government is more proactive than ever to ensure that child labor is completely banned in India. However, the latest amendment in 2016 has relaxed the guidelines a little. The employment of children below the age of 14 in all occupations and processes is prohibited. However, there are now certain exceptions to the law. If you are working in the entertainment industry or a non-hazardous industry, children above the age of 14 years can work after school hours and if all the amenities under the law are provided to them.