Starting HR from Scratch in a Small IT Firm: How Do I Begin Implementing Effective Practices?

Hi friends, I am working in a small IT firm that specializes in website and application design, with an employee strength of 16. Up to now, there have been no standard procedures for any HR functions, but considering the company's growth rate, there is a need to initiate HR practices. Please help me understand how I can begin implementing all HR functions effectively.

Hi, first of all, be clear about the practices you want to implement.

Practices to Implement

I want to start following practices:

1. HR policy guide
2. Payroll processing
3. Performance management
4. Documentation, which will also include the standard format of Joining letter, Appointment letter, Increment letter, etc.
5. Leave structure - Are there any set rules regarding it?
6. Labour Law - I want to know which laws are applicable for IT firms.

Regards

HR Policy Guide

First of all, you should define the HR policy with the management's consent, such as Travel Policy, Dress Code Policy, Attendance Policy, Leave Policy, Office Telephone Usage Policy, and Mobile Usage Policy, etc. Once approved by management, you can include it in the HR policy guide.

Payroll Processing

To initiate payroll processing, you should have knowledge of statutory requirements such as ESI, PF, PT, Income Tax, and other statutory regulations.

Performance Management

There are various types of appraisals, including 90, 180, and 360-degree appraisals, as well as the Fish Theory. Templates for these appraisals are available on the blog for application.

Documentation for Personnel File

For end-to-end recruitment, you may need to prepare standard templates such as Application Forms, Candidate Evaluation Forms (both technical and HR), Confidentiality Agreements, Offer Letters, Appointment Letters, Salary Structures, Induction Records, Training Records, Skill Matrix, and templates for separation.

Leave Structure

Prepare a leave policy including mandatory leaves like Earned/Privilege Leave and Sick Leave as per statutory requirements. Check the Leave with Wages Act for Maharashtra to ensure compliance. Additional leaves such as Casual Leave, Sick Leaves, Education Leaves, etc., can be provided by management as desired.

Labour Law

Given the total employment count of 16, enrollment with ESI and PF is required. Software companies are governed by the Shops and Commercial Establishment Act, so ensure you have the necessary certificates. Additionally, obtain a Professional Tax certificate and a trade license from the city municipal corporation. Compliance with acts such as the Gratuity Act, Minimum Wages Act, Leave with Wages Act, Maternity Benefit Act, and Bonus Act is essential.

Please let me know if you need further assistance or clarification.

Types of Appraisals

Can you please enlighten me on the types of appraisals such as 90, 180, and 360-degree appraisals, as well as the Fish Theory?

Concepts Behind Different Appraisals

What are the concepts behind 90-degree, 180-degree, 360-degree appraisals, and the Fish Theory?

I appreciate the inputs given by Mr. Jeevarathnam. As per law, eligibility criteria for Earned Leave and other leaves like Casual Leave and Sick Leave are subject to management decisions as per the policies. Gratuity is subject to completion of 5 years and 1 day. However, ESI, PF, and PT need to be maintained by you as per the existing strength (more than 10 employees). Initially, you can outsource these activities, and slowly they can be managed within the company.

For any assistance, you can contact me through email at [Email Removed For Privacy Reasons].

Is it a Registered Pvt Ltd Company or Partnership Firm?

First of all, read all labor laws and discuss with various people to understand what exactly the law is saying. Do not get confused while working on labor laws.

Outsource salary to any vendor; they will charge you 4,000 to 6,000 per month for the first 30 employees, so you can concentrate more on your HR practice.

Now visualize what kind of policies are there in the market and which are the best for your organization. (Do Addition/Deletion) (First work on Leave Policy, Work from Home.)

Prepare a company manual and ask existing employees to work on that. Also, give a copy of the manual to every new joiner from now onwards to reduce your policy and administrative work.

Spend your major time on PF, ESIC, Gratuity, MLWF-related work to secure your director from legal issues. "DO NOT IGNORE PF/ESIC/GRATUITY/MLWF."

Before taking any step, study all pros and cons and communicate with your management team; otherwise, they will laugh at you. Your study alone can help you to grow with your organization.

All the best.

Regards