Dear Seniors,
In a company, a HR Manager has completed his 58 years and retired but was retained by the company as a consultant (3rd party). Can he sign compliance-related documents? Is it correct? In other words, is a HR Manager hired on a 3rd party role (outsourced) legally eligible to sign compliance-related documents of the 1st party, i.e., the principal company?
From India, Dehra Dun
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4In a company, a HR Manager has completed his 58 years and retired but was retained by the company as a consultant (3rd party). Can he sign compliance-related documents? Is it correct? In other words, is a HR Manager hired on a 3rd party role (outsourced) legally eligible to sign compliance-related documents of the 1st party, i.e., the principal company?
From India, Dehra Dun
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From a contract point of view, any document can be signed by any two parties within the legal domain. For example, you cannot sign a document for an antisocial cause.
When someone becomes a consultant, they are no longer an employee of the company but a person who works for the betterment of the company. Please bear in mind that responsibilities for legal or internal administrative matters will be only with those who are on the permanent rolls of the company.
To protect your company's interests, you can retain the essence of the compliance document suitably modified and have a separate contract signed between your company and the consultant.
Regards,
V. Raghunathan
From India
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When someone becomes a consultant, they are no longer an employee of the company but a person who works for the betterment of the company. Please bear in mind that responsibilities for legal or internal administrative matters will be only with those who are on the permanent rolls of the company.
To protect your company's interests, you can retain the essence of the compliance document suitably modified and have a separate contract signed between your company and the consultant.
Regards,
V. Raghunathan
From India
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Generally, companies will not designate a consultant as a manager with statutory responsibility. So, as such, it's a bad idea. There is nothing in the law preventing a consultant from signing a compliance. However, when some problem arises, this fact may be an issue.
Probably, he should then be hired as a Fixed-Term Employee instead.
From India, Mumbai
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Probably, he should then be hired as a Fixed-Term Employee instead.
From India, Mumbai
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Hello Ashe,
Saswats Banerjee's suggestion is BOTH implementable and practical. You can hire him as a Fixed Term Employee, meaning on a contract directly by the Principal Company. His contract should contain the appropriate clauses that clearly define the powers you wish him to have. The contract can be extended periodically as per needs.
I know of a person over 60 years old hired this way at a senior level who also signs international documents.
Regards,
TS
From India, Hyderabad
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Saswats Banerjee's suggestion is BOTH implementable and practical. You can hire him as a Fixed Term Employee, meaning on a contract directly by the Principal Company. His contract should contain the appropriate clauses that clearly define the powers you wish him to have. The contract can be extended periodically as per needs.
I know of a person over 60 years old hired this way at a senior level who also signs international documents.
Regards,
TS
From India, Hyderabad
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Authorization of Third-Party Employees
It is a good question by the initiator of this thread. Can any third-party or outsourced employee be authorized to sign any documents on behalf of the Principal? This is the question the initiator has asked. We may see anybody signing anything, but is it legal?
Questions on Fixed Term Employment
I have another question for you, with due respect to you all: What is Fixed Term Employment? Under what law is the term "Fixed Term Employment" written? How can you appoint an employee on his retirement or resignation as a Fixed Term Employee? How can you take any senior-level person on an outsource basis? What is the legal validity of outsourcing?
Answers to the above questions within the parameters of Indian Laws will be enlightening to all who will be reading it.
Regards
From India, Mumbai
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It is a good question by the initiator of this thread. Can any third-party or outsourced employee be authorized to sign any documents on behalf of the Principal? This is the question the initiator has asked. We may see anybody signing anything, but is it legal?
Questions on Fixed Term Employment
I have another question for you, with due respect to you all: What is Fixed Term Employment? Under what law is the term "Fixed Term Employment" written? How can you appoint an employee on his retirement or resignation as a Fixed Term Employee? How can you take any senior-level person on an outsource basis? What is the legal validity of outsourcing?
Answers to the above questions within the parameters of Indian Laws will be enlightening to all who will be reading it.
Regards
From India, Mumbai
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The concept of a fixed-term employee is defined in the ID Act, as already stated by others. Even otherwise, there is nothing in Indian law to prevent any person from working under a specific contract of employment that clearly states their terms of employment and includes a termination clause. The only requirement is that they cannot contract away any of their rights under labor law. The only right they can contract away is their retrenchment compensation because the ID Act says this is not retrenchment if the contract is not renewed.
On the other part of the question you have posted, the law does not prevent the company from designating any person as authorized to sign any document of the company. They do not have to be an employee. They can be any person. It is the right of the owner of the business to decide whom they will trust to best represent them. The only place where the option is not available is the position of the occupier of a factory. That has to be a director of the company.
So, it is actually legally correct for the company to designate an employee, a FTE, off-roll/contract employee, or even a non-employee (say a family member). Such a person can be given any designation also, other than an occupier. I think even for the manager of a factory, there is no such restriction.
From India, Mumbai
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On the other part of the question you have posted, the law does not prevent the company from designating any person as authorized to sign any document of the company. They do not have to be an employee. They can be any person. It is the right of the owner of the business to decide whom they will trust to best represent them. The only place where the option is not available is the position of the occupier of a factory. That has to be a director of the company.
So, it is actually legally correct for the company to designate an employee, a FTE, off-roll/contract employee, or even a non-employee (say a family member). Such a person can be given any designation also, other than an occupier. I think even for the manager of a factory, there is no such restriction.
From India, Mumbai
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1. The initiator of this thread has mentioned the words "legally eligible to sign compliance-related documents of the 1st party, i.e., principal," whereas the learned senior expert, Sh. Banerjee ji, has mentioned the term "There is nothing in law preventing a consultant from signing a compliance." I could not understand which documents are called "compliance-related documents." Are such documents to be submitted to the principal employer or owners of the unit by the so-called consultant, or to any other authority?
2. I request the initiator of this thread or seniors to kindly elaborate on the following aspects for my knowledge:
(a) Which documents are called "compliance-related documents," and under which laws or Acts?
(b) Are such "compliance-related documents" submitted by the consultant to the employer or to any government authorities like the Factory Inspector, Labour Court, PF Office, etc.?
From India, Noida
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2. I request the initiator of this thread or seniors to kindly elaborate on the following aspects for my knowledge:
(a) Which documents are called "compliance-related documents," and under which laws or Acts?
(b) Are such "compliance-related documents" submitted by the consultant to the employer or to any government authorities like the Factory Inspector, Labour Court, PF Office, etc.?
From India, Noida
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Understanding Compliance-Related Documents
'Compliance-related documents' essentially refer to those documents that need to be submitted to either initiate or continue compliance with any aspect concerning the company or factory, such as ISO, AS9100, or CMM certifications, etc.
There is a wide array of documents that must be prepared to obtain such certifications or, once the company has these certifications, to renew them periodically. These documents are based on the practices, processes, and systems followed within that company.
What's related to government bodies is predominantly 'statutory' in nature. Therefore, they wouldn't form a part of this definition.
Regards,
TS
From India, Hyderabad
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'Compliance-related documents' essentially refer to those documents that need to be submitted to either initiate or continue compliance with any aspect concerning the company or factory, such as ISO, AS9100, or CMM certifications, etc.
There is a wide array of documents that must be prepared to obtain such certifications or, once the company has these certifications, to renew them periodically. These documents are based on the practices, processes, and systems followed within that company.
What's related to government bodies is predominantly 'statutory' in nature. Therefore, they wouldn't form a part of this definition.
Regards,
TS
From India, Hyderabad
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Thank you for advising me on the meaning of "compliance-related documents." However, the initiator of this thread has not specifically mentioned which documents the CONSULTANT is signing. Therefore, it is difficult to examine the issue accurately. Is the ex-HR Manager, now a CONSULTANT, signing all correspondence sent to government departments such as the Chief Inspector of Factories, EPF Commissioner, Regional Director ESIC, Fire Brigade Office, Estate Office, Police Department, etc.? If so, is the consultant signing these documents as a Consultant, an EMPLOYER, or on behalf of the EMPLOYER?
Are the returns, reports, etc., to be sent to various departments under different labor laws, revenue laws, etc., not considered "COMPLIANCE-RELATED DOCUMENTS"? Are there different types of compliance such as statutory compliance, ISO, AS9100, or CMM Certifications compliance? The discussion on whether the CONSULTANT is in full-time or part-time employment seems unimportant to me. I hope seniors will guide me on the aforementioned issues.
As far as I understand, ensuring compliance for various requirements to obtain ISO certification is an internal matter for any organization. In such cases, the employer/owner of a unit can delegate their authority or functions to any person, even if they are a CONSULTANT. However, regarding statutory compliance matters, I am doubtful if the employer can delegate their authority to a so-called consultant to sign documents under various laws, including revenue laws.
Regards
From India, Noida
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Are the returns, reports, etc., to be sent to various departments under different labor laws, revenue laws, etc., not considered "COMPLIANCE-RELATED DOCUMENTS"? Are there different types of compliance such as statutory compliance, ISO, AS9100, or CMM Certifications compliance? The discussion on whether the CONSULTANT is in full-time or part-time employment seems unimportant to me. I hope seniors will guide me on the aforementioned issues.
As far as I understand, ensuring compliance for various requirements to obtain ISO certification is an internal matter for any organization. In such cases, the employer/owner of a unit can delegate their authority or functions to any person, even if they are a CONSULTANT. However, regarding statutory compliance matters, I am doubtful if the employer can delegate their authority to a so-called consultant to sign documents under various laws, including revenue laws.
Regards
From India, Noida
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If the employer has been given signing authority for various listed compliance terms under the agreement with the Consultant, then I think there is no issue for any legal complications. The employer may assign signing authority that he deems suitable, but it should be in writing.
From India, Mumbai
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From India, Mumbai
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Hi Harsh, TS, let me clarify. I was referring to documents submitted to government agencies/authorities or documents that need to be authenticated and kept in the file as documents required under any statute. My reference to compliance is statutory compliance and not to ISO or other certifications.
Consultant's Authority to Sign Documents
So, the question is whether or not the consultant can sign it. I am of the opinion that there is no specific bar. The only thing I am not sure about is whether he can hold a position of officer in default (occupier, factory manager).
However, most owners are not comfortable with the idea of a consultant signing the documents going to a third party. In general, they get the consultant to approve but have the new HR manager actually sign the documents.
Regards
From India, Mumbai
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Consultant's Authority to Sign Documents
So, the question is whether or not the consultant can sign it. I am of the opinion that there is no specific bar. The only thing I am not sure about is whether he can hold a position of officer in default (occupier, factory manager).
However, most owners are not comfortable with the idea of a consultant signing the documents going to a third party. In general, they get the consultant to approve but have the new HR manager actually sign the documents.
Regards
From India, Mumbai
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No, a consultant cannot sign any documents, whether compliance-related or otherwise, on behalf of the company as they are not the legal representative of the company. In the event of any issues, the consultant cannot be held responsible for acts of violation by the company.
From India, Hyderabad
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From India, Hyderabad
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The debate is indeed taking interesting twists and turns. As the learned member Sh. Harsh Kumar Mehta pointed out, it is not possible to give a specific reply from a legal perspective to the member's query, which is whether a consultant is legally eligible to sign a compliance document, without knowing the nature of the compliance document and the context of the query. Cautioning the readers that what I say here is not a reply to the query but an examination of the scope of compliance management in order to find a way to connect the dots in this compliance puzzle, I may be permitted to say that the one-line query stirred up several lines of thought in me to grapple with the issue.
Having said that, I do not see any problem if an establishment engages a consultant to advise them on compliances and assist them in preparing the returns, registers, and records, etc., required under various labor laws, and issue a certificate to the employer that they are complied with in full. This is only an internal arrangement between the employer and the consultant.
Though the labor laws pin the responsibility on the employer/principal employer for fulfilling all compliances under various labor laws as seen from various returns and registers, they do not restrain him from delegating this responsibility to a representative of his (with the exception of occupiers or owners with regard to some under the Factories Act). The question is whether the employer can choose a consultant or a fixed-term employee to delegate this responsibility.
Signing Compliance Documents
Now coming to signing compliance documents purported to be submitted to government authorities under various Acts. The responsibility for compliance, in my view, does not begin and end with signing a compliance document, certifying that all is well. It is not a responsibility merely limited to submitting returns and maintaining registers but extends to actually implementing the obligations under various labor laws in the day-to-day administration of labor welfare, like adhering to working hours, muster roll management, overtime, leave management, payment of wages, remittance of statutory contributions on time, displaying various notices, First Aid Boxes, cleanliness, fire equipment, amenities like water facilities, creche, canteen, accident reporting, and a plethora of compliances on safety and health under the Factories Act. Therefore, anyone who certifies to the government that all these obligations are complied with must be someone who is involved with it directly on a regular and day-to-day basis. If a consultant is directly involved with it on a day-to-day basis, he must be stepping into the shoes of a regular employee. Compliances like the deduction of statutory contributions from wages can be made by the officers of the company who are authorized to pay wages but not consultants.
Penal Provisions and Accountability
A look at penal provisions of various laws also offers some clues to the tangle. Co-existing with the responsibility for compliance is also the accountability for breach of them. For any breach, first, a complaint has to be filed, and the complaint shall name the person who is responsible for the breach, and such person shall be one who is actually in charge of the responsibility and involved in the day-to-day affairs of labor administration. If the consultant, by signing any compliance document to be submitted to government authorities or any correspondence thereof, presents himself before the government authorities as someone who has control and knowledge of the affairs, he is likely to attract the accountability for breach of the provisions under various Acts. In such a case, it is doubtful whether a consultant agrees to accept this responsibility. If so, he is acting more like an employee than a consultant.
Though an employer can authorize a consultant to sign a compliance document, as there does not seem to be a legal bar, the member by his query probably hints at its seeming incompatibility with penal provisions of the Acts, apart from the risk of receiving demands from such consultants for a status of permanent employee.
Regards,
B. Saikumar
HR & Labor Relations Consultant
From India, Mumbai
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Having said that, I do not see any problem if an establishment engages a consultant to advise them on compliances and assist them in preparing the returns, registers, and records, etc., required under various labor laws, and issue a certificate to the employer that they are complied with in full. This is only an internal arrangement between the employer and the consultant.
Though the labor laws pin the responsibility on the employer/principal employer for fulfilling all compliances under various labor laws as seen from various returns and registers, they do not restrain him from delegating this responsibility to a representative of his (with the exception of occupiers or owners with regard to some under the Factories Act). The question is whether the employer can choose a consultant or a fixed-term employee to delegate this responsibility.
Signing Compliance Documents
Now coming to signing compliance documents purported to be submitted to government authorities under various Acts. The responsibility for compliance, in my view, does not begin and end with signing a compliance document, certifying that all is well. It is not a responsibility merely limited to submitting returns and maintaining registers but extends to actually implementing the obligations under various labor laws in the day-to-day administration of labor welfare, like adhering to working hours, muster roll management, overtime, leave management, payment of wages, remittance of statutory contributions on time, displaying various notices, First Aid Boxes, cleanliness, fire equipment, amenities like water facilities, creche, canteen, accident reporting, and a plethora of compliances on safety and health under the Factories Act. Therefore, anyone who certifies to the government that all these obligations are complied with must be someone who is involved with it directly on a regular and day-to-day basis. If a consultant is directly involved with it on a day-to-day basis, he must be stepping into the shoes of a regular employee. Compliances like the deduction of statutory contributions from wages can be made by the officers of the company who are authorized to pay wages but not consultants.
Penal Provisions and Accountability
A look at penal provisions of various laws also offers some clues to the tangle. Co-existing with the responsibility for compliance is also the accountability for breach of them. For any breach, first, a complaint has to be filed, and the complaint shall name the person who is responsible for the breach, and such person shall be one who is actually in charge of the responsibility and involved in the day-to-day affairs of labor administration. If the consultant, by signing any compliance document to be submitted to government authorities or any correspondence thereof, presents himself before the government authorities as someone who has control and knowledge of the affairs, he is likely to attract the accountability for breach of the provisions under various Acts. In such a case, it is doubtful whether a consultant agrees to accept this responsibility. If so, he is acting more like an employee than a consultant.
Though an employer can authorize a consultant to sign a compliance document, as there does not seem to be a legal bar, the member by his query probably hints at its seeming incompatibility with penal provisions of the Acts, apart from the risk of receiving demands from such consultants for a status of permanent employee.
Regards,
B. Saikumar
HR & Labor Relations Consultant
From India, Mumbai
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Well said, Mr. Saikumar.
Statutory Compliance Reporting
Firstly, reporting of the firm's/the employer's statutory compliance to any Public Authority is not a mere verbal communication but a declaration of statutory observance to the extent either prescribed or possible. In either case, it carries with itself the risk of scrutiny by the concerned authority as well as accountability for penal consequences in the event of any subjective shortfall, as rightly pointed out by Saikumar.
Authentication of Statutory Reports
Secondly, certain specific statutory reports do not permit their authentication by any other person authorized by a general and internal delegation of power to sign.
Delegated Responsibility in Document Signing
Thirdly, even viewed from a general perception, signing of any document on another's behalf in an institutional context is a delegated responsibility arising out of administrative exigencies. Normally, it would be restricted to internal communications. In such a case also, the authority to sign on another's behalf coexists with the responsibility to vouchsafe.
Fixed-Term-Contract Employees and Document Signing
Fourthly, coming to Fixed-Term-Contract Employees signing documents, though their appointment is ad hoc and lasts for a relatively lesser period of employment, it does not alter their employment relationship with the employer other than its fixed duration in the contract of their employment. Therefore, for all practical purposes, including statutory compliance reporting, their authority to sign on behalf of the employer depends upon their designated role-play in the subject matter.
Role of Consultants in Compliance Reporting
Finally, a consultant, by virtue of the very nomenclature, is just an advisor specialized in a particular aspect or activity. His responsibility is restricted to tender advice on a particular issue referred to him. His advice may, at times, if not always, comprise alternatives. Ultimate discretion remains with the contractee to choose the most appropriate suggestion or to reject them all in toto, thus making the relationship a mere contract for service. Therefore, no consultant would be asked to sign statutory compliance reports, for the same could be rejected for want of proper authentication. Instead, his advice could be sought in the matter of drafting compliance reports as suggested by Saswata Banerjee.
From India, Salem
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Statutory Compliance Reporting
Firstly, reporting of the firm's/the employer's statutory compliance to any Public Authority is not a mere verbal communication but a declaration of statutory observance to the extent either prescribed or possible. In either case, it carries with itself the risk of scrutiny by the concerned authority as well as accountability for penal consequences in the event of any subjective shortfall, as rightly pointed out by Saikumar.
Authentication of Statutory Reports
Secondly, certain specific statutory reports do not permit their authentication by any other person authorized by a general and internal delegation of power to sign.
Delegated Responsibility in Document Signing
Thirdly, even viewed from a general perception, signing of any document on another's behalf in an institutional context is a delegated responsibility arising out of administrative exigencies. Normally, it would be restricted to internal communications. In such a case also, the authority to sign on another's behalf coexists with the responsibility to vouchsafe.
Fixed-Term-Contract Employees and Document Signing
Fourthly, coming to Fixed-Term-Contract Employees signing documents, though their appointment is ad hoc and lasts for a relatively lesser period of employment, it does not alter their employment relationship with the employer other than its fixed duration in the contract of their employment. Therefore, for all practical purposes, including statutory compliance reporting, their authority to sign on behalf of the employer depends upon their designated role-play in the subject matter.
Role of Consultants in Compliance Reporting
Finally, a consultant, by virtue of the very nomenclature, is just an advisor specialized in a particular aspect or activity. His responsibility is restricted to tender advice on a particular issue referred to him. His advice may, at times, if not always, comprise alternatives. Ultimate discretion remains with the contractee to choose the most appropriate suggestion or to reject them all in toto, thus making the relationship a mere contract for service. Therefore, no consultant would be asked to sign statutory compliance reports, for the same could be rejected for want of proper authentication. Instead, his advice could be sought in the matter of drafting compliance reports as suggested by Saswata Banerjee.
From India, Salem
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Thank you, Mr. Umakantan, for bringing more clarity to the issue, as you always do. My comments were based on a summary understanding of the schemes under various labor enactments without diving deep into them to test where the query stands when pitted against the provisions of the Acts.
For example, Sec.2(e)(ii) of the EPF Act 1952 defines 'Employer' for establishments other than a factory as the person or the authority which has ultimate control over the affairs of the establishment or the manager, managing director, or managing agent to whom such control has been entrusted by the employer. In my view, a logical inference that can follow from this definition is that either the employer shall comply with the obligations imposed by the Act and the various Schemes thereunder, or the manager, managing director, or managing agent authorized by him in this behalf can be held accountable for compliance.
Here, there is no use of any phrase in the definition of 'Employer' where you can fit a consultant, as he does not fall under any of the authorities to whom the employer can entrust his powers and responsibilities. Maybe we can come across such provisions as we wade through the Acts. Thanks once again.
Regards,
B. Saikumar
HR & Labor Relations Consultant
From India, Mumbai
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For example, Sec.2(e)(ii) of the EPF Act 1952 defines 'Employer' for establishments other than a factory as the person or the authority which has ultimate control over the affairs of the establishment or the manager, managing director, or managing agent to whom such control has been entrusted by the employer. In my view, a logical inference that can follow from this definition is that either the employer shall comply with the obligations imposed by the Act and the various Schemes thereunder, or the manager, managing director, or managing agent authorized by him in this behalf can be held accountable for compliance.
Here, there is no use of any phrase in the definition of 'Employer' where you can fit a consultant, as he does not fall under any of the authorities to whom the employer can entrust his powers and responsibilities. Maybe we can come across such provisions as we wade through the Acts. Thanks once again.
Regards,
B. Saikumar
HR & Labor Relations Consultant
From India, Mumbai
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Authority to Sign Compliance Documents
I have worked with organizations as Head of HR in a consultancy capacity. I have personally drafted and signed the statutory and compliance documents, and no government bodies have objected to them. An internal delegation letter was created to grant me the authority to make decisions and sign on behalf of the company.
I replicated this process in two states, Maharashtra and Gujarat. There is no law stipulating that only a permanent employee must sign documents. The law dictates that an authorized person must sign the documents to ensure the company is held accountable for its actions.
Regards,
Ashutosh Thakre
From India, Mumbai
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I have worked with organizations as Head of HR in a consultancy capacity. I have personally drafted and signed the statutory and compliance documents, and no government bodies have objected to them. An internal delegation letter was created to grant me the authority to make decisions and sign on behalf of the company.
I replicated this process in two states, Maharashtra and Gujarat. There is no law stipulating that only a permanent employee must sign documents. The law dictates that an authorized person must sign the documents to ensure the company is held accountable for its actions.
Regards,
Ashutosh Thakre
From India, Mumbai
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