Starting from Scratch: How Do I Set Up a Fair Salary Structure for a New HR Department?

Setting Up the HR Department

I recently joined an organization where there was no HR department previously, and I am the first employee recruited in HR. I have to start up the HR Department from the very beginning.

How to Decide and Fix the Salary Structure

Up until now, there was no salary structure, and now the management wants to set a salary structure for all the employees. They have asked me to set a salary structure with PF and ESI, and another one without PF and ESI. My organization is a Pvt. Ltd. company in the engineering construction field. Please suggest and help me in this regard.

Thanks to all.

Dear Mr. N K Sundaram,

I have gone through this post. We are also looking forward to deciding the salary structure in a scientific way as well as prescribed by compliance. Could you please contact us and provide details for it? This will enable us to work out further details.

Regards,

Nilesh Dodiya
Manager - HR
KICH Architectural Products Pvt Ltd.
Rajkot (Gujarat)
Mobile: +91 93774 13638
E-mail: career@kichindia.com

Starting the HR Department

Firstly, to start the HR Department, you need to first understand people management and organizational culture. It is important to understand that whatever policies or procedures you create are for the team, and HR policies must embody values and a human touch.

Before implementing any rules and regulations, it is crucial to conduct research on the best practices that other companies are currently following. This will benefit both employees and the employer.

Determining Salaries and Compliance

When determining salaries, it is essential to understand the compliance requirements for your organization. Consider the following:

1) Type of firm:
a) Is your company under proprietorship?
b) Is your company a Private Limited entity?
c) Is your company Limited?

Depending on the type, the applicability of legal compliance varies. For instance, if your company is a Private Limited entity, laws such as the Employees Provident Fund Act 1952, Employees State Insurance Act 1948, Bonus Act, Gratuity, and Factory Act are applicable.

Additionally, at your engineering company site, you should note:
a) The number of male and female workers.
b) The distribution of skilled, semi-skilled, and unskilled workers.
c) Create a Salary and Wages chart.
d) Understand the minimum wages for different categories of workers based on state, city, and updates over time.
e) Obtain PF and ESIC registration numbers from the respective offices.
f) Ensure provisions like a creche for female workers, a medical room with a nurse, lockers, canteen, transport, and proper working conditions.

The requirements mentioned above are specific to a factory or production unit. If your company is in the service industry, the applicability may vary slightly.

For further details on PF and ESI, coordination with me is necessary due to the complexity of the topic, including forms, codes, and returns.

This is a broad topic, so please advise your friend to connect with me for a comprehensive understanding.

Kind regards