Navigating Employee Payment, Poaching, and Holiday Policies Without an HR Team: Seeking Advice

I am the director of a company where we do not have an HR department. I have some questions that we have been struggling with for a few years:

Employee Payment Obligations

1. If a new employee leaves in 4 days, 10 days, or before completing a month, are we liable to pay them?
- Firing: In case of misconduct or misbehavior by the employee.
- Firing: In case of false submission of documents, which are verified after a few days of hiring.
- Employee quitting due to excessive pressure or incompetence.

Handling Employee Poaching

2. We have observed some employees coming in from various agencies trying to poach our team for other companies. How should we handle this situation?

Probation and Holiday Policies

3. Can someone provide me with a probationary appointment letter, an appointment confirmation letter after the probation period is complete, and a list of the minimum holidays that are mandatory to be given in India? We often encounter different employees inquiring about their religious holidays or gazetted holidays. Our company operates as a service provider, and we cannot accommodate numerous holidays. What should be our approach?

Thanks in advance.

The paragraph-wise replies are as below:

Employee Payment Obligations

I am the director of a company where we do not have an HR. I have some questions which we have been having a problem with for a few years:

1. If a new employee leaves in 4 days, 10 days, or before even a month's completion, are we liable to pay him/her?

a. Firing - In case of misconduct from an employee or misbehavior.

b. Firing - In case of false submission of documents which are verified after a few days of hiring.

c. Employee quitting due to a lot of pressure or incompetency.

Comments: First and foremost, you have been running the company without an HR. What was the logic? Have you calculated the cost your company has incurred for not keeping HR? Does it outweigh the cost of having HR? In each of the above cases, i.e., a, b, and c, you need to pay till the last working day of the employee. This is mandated by the Payment of Wages Act.

Handling Employee Poaching

2. We have seen some employees come in from various agencies trying to take away our team to other companies, what to do with them?

Comments: These things are common everywhere, and your company should be no exception. Recently, Vishal Sikka has joined as the CEO of Infosys. Ever since he has joined, he has been pulling high-level staff from his ex-company, SAP Labs. To make sure that employees stay in your company, you need to create a conducive culture. What employee retention strategies have you employed? What is the manpower attrition percentage? Is it above or below the industry standard?

Probationary Letters and Holiday Policies

3. Can anyone provide me with a probationary appointment letter, appointment confirmation letter after probation is complete, a list of minimum holidays which are mandatory to be given in India? Since we see different employees turning up and asking about their religious holidays or gazetted holidays. Our company is a service provider company and we cannot afford so many holidays, what to do?

Comments: For the formats of the appointment letters, search this forum. You will get sufficient formats. It is surprising to find that even after running the company for a "few" years, you are yet to finalize drafts of these basic documents. This activity should have been completed when the company was started. If you are from a service-based company, then you are covered under the Shops and Establishment Act of the state from which you operate your company. It is mandatory to declare closed holidays and provide leave as per this act. Generally, as per the Shops and Establishment Act of most states, it is mandatory to provide 10 closed holidays. Of these, it is mandatory to provide holidays on Republic Day, Independence Day, and Gandhi Jayanti. Added to this is the state formation day, like in the state of Karnataka. The other six/seven are to be decided by the management of the company. However, check the law of your state.

Thanks,

Dinesh Divekar

Bangalore - 560092

The poster of this query needs to hire a capable HR person with 10-12 years of experience. Most of these queries can be sorted out by an HR person. The management, as a team, needs to work and create a conducive environment in which employees think twice before leaving. Mobility is a worldwide phenomenon. Certain departures will take place. One must have a plan of action. Keep an eye on key personnel to ensure they can be retained through a conducive, employee-friendly policy.

"We have seen some employees come in from various agencies trying to take away our team to other companies. What to do with them?" A strict policy on visitor entry for matters other than business-related can be introduced, and proper records of visitors using any VMS can be maintained. The best way to stop such departures is by winning employee loyalty. Obviously, your organization needs to revamp and have a proper HR department that is proactive, friendly, and professional in duties and attitudes.

Often, employers look at support services as a waste of investment and design their own customized list of holidays, their own minimum wages act, PF/ESI, etc. The joke is that many employers modify everything prescribed by labor law or Establishment Act and call it 'company policy'. A wonder! After confusion erupts, they realize it is a hot stove to sit on. So, it is very easy to start companies to fulfill one's own long-time dream without an action plan.

As a retired academic outside of HR, I tend to pose questions rather than respond to inquiries that lack sufficient details about the situation.

Details Needed for Effective Responses

For instance, in this specific scenario, Mahajan Sahab should have provided additional information, such as:

1. What is the size of the company where he serves as a director?
2. Where is the company situated?
3. Why is there a lack of HR support? Is it due to the company being new or small and unable to afford HR services?
4. Has he conducted any online research on platforms like the web or CiteHR to see if there are existing resources on drafting appointment letters?
5. Why hasn't the company established any policies regarding holiday entitlements?

I value the insights shared by experts; however, I believe that responding without first understanding the full context could lead to unnecessary debates, as seen in the discussion at https://www.citehr.com/527285-met-ac...hicle-pg3.html.

Guys, thanks for replying. I seriously think we should hire an HR before anything else. Seeing the gravity of our situation and judging your responses, I think it was a bad decision not to hire an HR.

Response to Nashbramhall's Questions

1. What is the size of the company for which he is a director?
Ans: About 30 employees.

2. Where is the company located?
Ans: We have offices in Delhi & Amritsar.

3. Why is there no HR? Is it because the company is new or because it is small and cannot afford one?
Ans: It's because I never thought I needed one... Bad decision on my part.

4. Has he done any search on the web/CiteHR to check if there is already any information on drafting appointment letters?
Ans: Yes, I found lots of appointment letters & other stuff but because of the absence of a talented HR, I think I'm goofing up big time by mixing different types of appointment letters.

5. Why has the company not established any policies on holiday provision?
Ans: We are forced to make new policies every year because staff changes very rapidly. Earlier, I thought it was due to my hiring skills not being good enough, but now I think HR is missing. Every year, a new type of staff comes in and they complain about holidays. We started by offering 24 to 36 holidays a year 6 years back but now have come down to about 8 National Holidays + 5 extra holidays a year in case employees have a grave emergency, which is again another loophole.

All this is adding to employee dissatisfaction, I think. What do you guys suggest? What should I look for in a good HR for my company? Any good resources or recommendations for our Delhi-based office?

I think this is the next big task for me!! Your help is solicited and appreciated.

Dear Mr. Mahajan,

HR is not about hiring an HR person. Whether you have 30 employees or 3000 employees, you can still operate without a designated HR person provided you have well-laid-down HR policies that are automated.

In the context of the information provided, I suggest that you do not need to engage an HR person. Perhaps you can engage a Senior HR consultant who can advise you regularly.

1. Whether to Pay if an Employee Leaves Within a Few Days

Legally, you need to pay. You need to deduct PF, and you need to deduct ESI. How one manages practically is a different question. If you engage an HR assistant, he or she cannot make decisions as it is an ethical question. Only you need to make a decision. Consider how you can manage practically. Consult an HR consultant with experience.

2. Firing

Firing on account of misbehavior implies stigma, and legally you cannot terminate unless there is an inquiry.

Firing on account of misrepresentation again requires a charge sheet and an inquiry for termination. The process is not as complicated as it sounds. My advice is not to engage anyone unless certificates are verified. However, issue a letter asking him to submit certificates, and if he does not comply, issue another letter stating that his services would be terminated. If there is still no compliance, then terminate his services. Drafting these letters is very critical.

If a person quits due to work pressure, let him quit.

3. Managing Competition

Business is all about managing competition. If they take your employees, you should not get discouraged. You need to refine your HR processes and policies yourself. You do not need an HR officer for this. I reiterate, engage a consultant for a year or so.

4. Offer Letters

Offer letters are available on the internet, but consult someone before you start using them.

5. Holidays

Legally, you need to provide 9 days of holidays. In some states, it is more. Finalize the holiday list yourself and display it. There will be three/four national holidays, and the rest will be festival holidays.

Regards.

Putting in place a professional HR system - whether outsourced, hiring a senior consultant, or in-house - is essential. Using technology to maintain records, generate reports, handle payrolls, legal deductions, etc., will also be a good idea. Managing human resources is important to achieve production targets and other key result areas (KRAs) of the company. Ad hoc arrangements of directors looking after routine affairs of HR will be counterproductive.

Dear Mahajan, Thank you very much for answering my questions. As I thought, you are the owner and Director of your firm. You also seem to have realized your mistakes.

Main Mistake: Change of Policy on Holidays

I think the main mistake lies in the change of policy on holidays. "We started with offering 24 to 36 holidays a year 6 years back but now have come down to about 8 National Holidays + 5 Holidays a year extra in case employees have a grave emergency, which is again another loophole."

Please go to http://www.acas.org.uk/media/pdf/d/m...le-version.pdf and study the document carefully. It does not matter if the firm is in India or the UK, there are some general principles that a good company should follow. Please tell us why you reduced the number of days of holidays, as you seem to have more than halved the number.

Put yourself in their position and tell us what you would do in their position.

As experts have opined, there is no need to engage a full-time HR, and you can engage consultants to advise you.

Regards

I have experience running small companies and businesses, so I understand the problem you are facing. First, I don't think the absence of HR is the real issue. You can easily manage without HR in a company of this size. However, if you do have an admin cum HR executive in the company, it makes management easier. Hiring an HR with 10 years of experience is a bad idea. You won't likely find one, and even if you do, they may not be able to contribute much to a small company. Instead, look for someone with a couple of years of experience so that you don't end up having to teach them how a company or business operates.

You probably need to hire an HR consultant who can work with you for a few weeks or a month to prepare policies and processes. Then, you and your admin assistants should implement them.

Please remember that policies and processes are flexible and can be changed, but any changes should have a valid reason.

Regarding Holidays

I have other service clients who provide 4 fixed holidays (national holidays) and 4 optional holidays that each employee can select at the beginning of the year. However, it is essential and required by law to provide leave. Check the state rules. Generally, after one year of service, employees are entitled to 15 or 21 days of leave that they can use as needed. No leave is allowed in the first year. Employees can take leave without pay with the approval of management (you).

For more details, you should consult with a professional as it requires much more detail and focus than what members of this forum can provide.

Hi Mr. Mahajan,

In any case of being asked to leave, the company is liable to pay until the employee's last working day in the organization. If the employee is leaving voluntarily, then the employee is liable to pay back the notice amount as recovery to the company.

Thank you.

Dinesh, I agree. But for achieving that, it does not need to have an HR person with 12 years of experience. Such a person will be unable to fit into a position in a small company and will probably give rise to more problems. What you are saying can be achieved by someone with a couple of years of experience, but coupled with proper HR policies and processes implemented. Which is why, I have suggested that he should get an HR consultant to set up the proper processes and policies for him.

Dear Saswata, We all agree that there is a need to put in place proper HR systems to address administrative and HR issues. Unattended problems will eventually lead to a loss of productivity and issues arising from a lack of legal compliance. Now, the director needs to decide whether to outsource or hire an HR professional. In my opinion, an HR person with 10-12 years of experience is crucial because setting up the system correctly from the foundation upwards is essential. Freshers may not possess the depth of knowledge required to establish a system that covers two states. Some posts in the forum by HR professionals reveal a lack of basic knowledge on issues such as PF, ESIC, etc. This lack of understanding is why I suggest someone with 10-12 years of experience in HR for such situations. Nevertheless, the director seems to have grasped the situation, and I am confident he will make a considered decision.

Thank you.

Dear Mr. Mahajan,

There have been many replies to your posts, but I am still tempted to offer my views.

1. HR has to be there, but that doesn't necessarily mean that you need an HR. If you have the time and inclination to handle people issues, you can take on that role yourself for as long as you can. You will need to learn the basics and behave like an HR manager, not a director, at times.

2. Hiring and firing are not usually allowed, nor is it good for most companies. Please overhaul your selection process. Identify the problems that lead to resignations or terminations and try to select candidates who do not have these issues. Psychometric analysis may be helpful in such cases. Consider conducting activity-based interviews rather than traditional rounds. Observe your candidates closely and make informed decisions instead of relying solely on gut feeling.

3. Be patient with your employees. Allow them time to correct their behavior, and under no circumstances should you consider withholding payment for days worked. In the long run, this will only damage your company's reputation in the job market. Establish a well-defined probation period, set reasonable expectations, and ensure your employees adhere to them.

4. You may not be able to control holidays. India still has a higher number of working days compared to more developed countries. Consider hiring additional staff to offset the impact of holidays. More holidays often lead to better work-life balance, happier employees, increased production, reduced turnover, and a stronger focus on core business activities.

Consider Henry Ford's story of how increasing wages and reducing working hours led to significant profits.

5. Start considering compliance matters such as PF, ESI, etc. with your company now employing 30 individuals.

Regards