How Do I Start Creating HR Policies for a Small Company with No Existing Framework?

Dear All, I have joined a small company (construction). It is a 2.5-year-old organization, but it does not even practice issuing offer/appointment letters to its employees. It's really incredible that around 20 employees are working in this company without appointment letters. Now I am given the responsibility to formulate and implement all HR Policies and Systems, but I am a fresher. I have a sound knowledge of all HR functions, and I have taken up the job as a challenge.

Request for Suggestions on HR Policy Formulation

I request you all to suggest and advise me on how to start working and what policies should be formulated. I am even unable to understand from where I should begin to work.

Awaiting your valuable suggestions and advice.

Regards,
A.G.Hegde

First, get the Employee Information sheets from your sites. Obtain labor licenses, P.F., and E.S.I. registrations. Then, formulate the salary structure of all the employees depending on their cadre so that you can deduct P.F. and E.S.I. where applicable.

"But do not have even practice of issuing offer/appointment letter to its employees." This is so strange, and being a construction company, there are many applicable labor laws and related statutory returns. Please make sure compliance with statutory requirements is maintained. This is much more important than HR policies. I would suggest discussing all these critical aspects with management immediately. You may consult the company's legal adviser if required.

Once this is settled, then you may start on the HR policies part.

Steps to Establish HR Policies in a New Company

First, gather all employee details such as name, designation, joining date, and salary. Then, create a separate file for each employee to store their information.

Additionally, discuss the leave policy, attendance, office timing, LTC, bonus, probation, salary revision, increment, loan, dress code, list of holidays, insurance, and salary account with your senior to establish the necessary rules. Ensure to prepare the appointment letter but seek approval from seniors, as some companies require specific legal points based on their policies.

Develop an HR Manual to facilitate easy updates when policies are revised or new ones are added, as these policies vary across different companies.

Would you discuss in detail each aspect such as the preparation of offer letters, list of holidays, leave policy, salary structure, etc.? Could you forward me the basic activities performed by HR?

Thank you.

We both are going through the same condition. I have the same responsibility, with the only difference being the industry type. I think Kulkarni Madhuri has given a very good suggestion; it is helpful for me also.

Dear Hegde, just preparing the offer and appointment letter is not a big issue. Prior to that, you should prepare the leave and salary structure for different levels of employees. What will be the gross and net package an employee will be offered? Everything should be mentioned in the offer and appointment letter because an appointment letter is also a contract letter between the employee and employer.

As a construction company, you will be under the purview of many acts. You should ensure acts like the Shops & Commercial Establishment Act, EPF, ESI, Contract Labour Act, W.C. Act (if applicable), Minimum Wages Act, etc.

Regards

I suggest you subscribe to Labour Law Reporter. Their address is on the web. Once you subscribe, they give you a diary that contains suggested formats of several letters issued by establishments, which you can modify to suit your requirements.

Please note, for all other HR policies, you need to collate information available on this website. You need to choose a topic and browse this website. You will get tons of information, but you need to spend the time. I would suggest that every week, work on a particular topic like Recruitment, Induction, Welfare, Leave rules, Performance assessment, Career Progression, Wage & Salary fixation, Employee Retention, Training, Exit interviews, Terminal benefits.

Once you have done some homework, you can post it on the site, and you are sure to get advice from many HR professionals. WE SHALL ALL HELP BUT COME BACK WITH SOME GROUNDWORK.

Regards,
M.V. KANNAN

Dear Kannan, Thanks for your suggestions. I am working on different topics daily, and I have almost completed the recruitment selection, leave rules, and employee handbook. I am currently looking into recruitment policies and traveling policies, and I am already working on ESI and PF registration matters.

Regards, A.G. Hegde

Hi, HAPPY DIWALI!  Sorry for the mistake in addressing you. In my job, I plan to start with personal files and general rules, then move on to policies. What’s your opinion about this? Please reply.