Starting from Scratch: How Do You Set Up HR Practices in a New Company?

Hello friends,

I am new to HR functions. In my previous organization, which had been in existence for 80 years, all the rules and regulations were already set. So, all I had to do was follow the system. Now, I have recently joined a new organization where there was no HR department. I have to initiate many practices, and it is proving to be a challenging time. CiteHR has been of immense help during these past two months. I am grateful to all the members.

Here is some basic information about PF, which I hope will be useful in understanding the concept.

Thank you.

Regards,
Pari

Hi Pari,

Your posting has been a great help. Just a question, in our organization, we have just crossed the number of 20 employees. When does the PF deduction go into effect? And if we don't want to deduct PF for employees earning more than Rs 6500/-, who gets to decide on that matter? Employee or the Employer?

Kindly help me here.

Thanks & Regards,
Khyati

Hi Khyati,

PF deduction starts from the month's salary in which the organization attains the figure of 20 employees on the payroll. As for deduction/non-deduction above the statutory limit of Rs. 6,500/-, it is a management decision. Generally, as a staff welfare approach and an effort in Human Resources awareness, employers contribute at 12% on the entire amount of (basic + DA). However, nowadays, it is a growing trend among employees to not subscribe to PF due to the decreasing value of money and their need to have cash in hand. Depending on your management decision and HR Policy regarding CTC - special allowance, you can take an undertaking from the employee stating that only mandatory PF should be deducted, and the rest of the amount should be given to them in their salary as a special allowance. This will be taxable in the hands of the employee.

Hope this clears your doubt.

Thank you,

Regards,

Pari

Hi Pari,

Your compilation of all the information on PF has been very helpful to me. I too have moved from a well-structured MNC to a small startup unit. Previously, having handled employee relations on a larger scale, I found handling payroll single-handedly a little tough. Your document has resolved a lot of ambiguities for me. Thank you so much.

Please keep posting.

Cheers

Hi,

This is Usha, and I work for a software development and consulting company. I had a chance to go through the postings on PF, and all are very informative. Thanks a bunch to everyone who provided the information.

I have a question. We recently crossed 20 employees, and most of our employees' salaries crossed 6,500/- gross. Only 3-4 are having salaries below 6,500/- gross a month. Are we still liable for PF, and do we need to register ourselves? If employees do not wish to participate in PF and would want to be exempt, is it possible? For information, ours is a 6-year-old company.

Kindly give some input on this.

Thanks,
Usha