Labour Codes Simplified – How does it impact employers/organisations?

by Prompt Personnel | Jul 27, 2022 | Human Resources

In India, labour is a contemporary issue, which means that both the Central and State governments can pass legislation on the subject. The recent approval of three labour regulations represents a significant step forward in the country’s broader reform journey, helping to align the labour ecosystem with the imperatives of India’s globalised economy.

At the same time, they provide much-needed coverage to the vast majority of workers who have found themselves outside the regulatory framework. Parliament established four labour codes — the Wage Code, the Industrial Relations Code 2020, the Code on Occupational Health, Safety, and Working Conditions 2020, and the Social Security Code 2020 — that consolidate many of the Central labour legislation.

What was the government’s motive for enacting the codes?

The government wished to make compliance easier and ensure equity for everybody. The new regulations would ensure that technology is used more effectively for varied compliance and effective enforcement. The new labour standards also raised questions about whether they would apply solely to blue-collar workers or all employees. The new labour codes state unequivocally that the laws would apply to all employees of an organisation, regardless of their role/level/nature of duties/salary (with minimal exceptions).

New Definition Of Wages

One of the most significant developments has been a shift in the definition of pay. The administration has attempted to simplify the new common wage definition across all four codes. The new definition of wages includes all remuneration components expressed in monetary terms or capable of being described in monetary terms. Specific exclusions in the new definition include statutory bonus, house rent allowance, conveyance allowance, commission, and so on. These exclusions, however, are restricted to 50% of the total salary (except gratuity and retrenchment compensation). This change in the concept of wages and its widespread application will have an influence on employee benefits and employer costs.

The Impact Of The New Wages Definition

The revised pay definition will have a direct influence on gratuity costs. Gratuity will now be payable to all present and prospective workers under the revised definition of earnings. Another significant change concerns the period evaluated for gratuity eligibility. The previous requirement of a minimum of five years of employment for fixed-term employees has now been decreased to one year.

This means that fixed-term employees will now be entitled to gratuity after only one year of service with a firm. The same does not apply to permanent employees who are not hired for a set amount of time. After five years of service, permanent employees will be eligible for a gratuity.

Labour law consultants should also emphasise that under the labour rules, any worker can now request leave encashment at the conclusion of each calendar year. Such leave encashment is based on ‘wages’ as defined by the Labor Codes.

Are you looking for a labour law consultancy? Prompt Personnel is all you need!

The radical revisions to the labour regulations are likely to give a significant boost to labour reforms and have an influence on numerous companies across all sectors. The government’s goal is for the new legislation to decrease complexities, make Labour law compliance easy, increase openness and accountability, and benefit both companies and workers. The new regulations are intended to improve labour law compliance dramatically, owing to heightened criminal consequences.

As many as 40 Central laws govern the labour ecology, and each state has its own set of rules. Many of these were written decades ago and were no longer relevant in the current environment of economic development, growth, global trade circumstances, technological advancement, and changing consumer and producer expectations.

Many firms are now looking for labour law consultants as they have been perplexed by the complex and ever-changing statutory rules. In this challenging business environment, Prompt Personnel is a labour law advisor that assists clients in protecting themselves from the potential penalties of non-compliance with labour rules. Their expertise and distinguished knowledge in statutory compliance have effectively kept numerous organisations from facing risks and potential losses.

Strategies for Reducing the Risks Associated with Temporary Staffing Agencies

by Prompt Personnel | Jul 21, 2022 | Human Resources

Nowadays staffing agencies look after the needs of various organizations to accommodate them with efficient working employees. And for that various needs, appropriate solutions are also solved by staffing agencies. However, with the staffing agency’s liabilities related to workplace issues, clients should not assume that penalties can be avoided.

Hiring temporary staffing services through an agency offers no protection against employment liability. In a few circumstances, the temporary worker might look forward to holding the client responsible as if the temporary worker was hired directly through the client under the theory of ‘joint employer’.

The context of joint employer liability emerges in various circumstances, which include wage, retaliation, hour, discrimination, and harassment. Assessments to determine joint employment differ through jurisdiction, law, and regulations and are often considered irregular and fluid.

Clients who look forward to using staffing agencies should take into consideration the following things to minimize their risk:

Review the Contracts

The contract between the client and agency should include that the agency will indemnify and defend the client for penalties, losses, and fees of the attorney in association with the employees from the staffing agency. It also includes claims related to wages. In addition to it, the contracts should include warranties and representations by the temporary staffing agency assuring the client that the agency will perform its duties to its employees entirely. The individuals sent by the agency to the client’s office premises will have to abide by the contract.

Exercise Due Diligence

Before attaining services from the staffing agencies the client should conduct thorough background research which should include the number of clients they provide their service to, the location of their business operations, and the period they have been in business. Clients should connect with the current clients of the staffing agencies and request references from the agency to determine their work ethics. It is advisable to search concerning the litigation to determine if the staffing agency has any record of litigation formerly.

Require Proof of Insurance

Clients should acquire proof of worker’s compensation insurance coverage mandatorily before involving a staffing agency and need the verification at frequent intervals. The staffing agency should ideally maintain EPLI- (Employment Practices Liability Insurance).

The client might want to carry out some oversight of the compliance of the staffing agency with applicable laws and regulations before getting their services although such involvement could have negative and positive effects. By being more involved in everyday practices, the clients are more likely to be considered joint employers of the workers temporarily retained through the agency.

Staffing agencies should also carry out cautionary actions. Often agencies are titled as defendants in discrimination and harassment lawsuits for the allegation of wrongful conduct that take place on the premises of the clients. Temp staffing companies in India along with other things must ensure that their clients have policies like harassment complaints & anti-discrimination practices in place, and take action promptly to undertake and correct any improper activity of which agencies are notified and made aware.

Indian Companies’ Statutory Payroll Compliance – A Crisp Guide

by Prompt Personnel | Jul 15, 2022 | Human Resources

There are many potential legal issues related to compliance, from employees’ fair treatment of labor to protecting the company from absurd wage or benefit demands by trade unions or combative employees. While a company wants to adhere to all laws, legal details may easily slip through the cracks if the necessary attention is not given to them.

A company’s non-compliance with these regulations can lead to serious legal issues, including fines, penalties, and imprisonment.

The complexity of doing business has increased tremendously as you need to sync the operational and legal aspects of your organization. Statutory Payroll compliance is one of the key aspects you need to consider when you have employees working within your organization.

Payroll distribution primarily refers to the method associated with processing employee salaries. However, payroll is not just about paying salaries to employees. The Government has established many acts that organizations must follow to stay compliant.

With the help of this brief guide, we’ll discover what these acts mean for Indian companies when processing payroll. Let’s have a look at it.

What is Statutory Payroll compliance?

The word statutory means “of or related to statutes”- rules and regulations. Compliance means adherence. Thus, Statutory Compliance means adhering to rules and regulations. Statutory payroll compliance refers to following (adhering to) payroll regulations. It is the legal framework that an organization must comply with when dealing with employees. There are different state and central labor laws. The HR of the company needs to be constantly updated with Labour Laws as their nature is ever-evolving and it affects the organization at multiple levels.

If you are finding it challenging to constantly stay updated with regard to new policies that the government updates, you can seek professional help from labor law consultants like Prompt Personnel.

The Growing Complexity of Payroll Compliance in India

As of 2025, business has become more complex, and hence, businesses must seamlessly align their legal and operational components. One of the most important factors that any business with employees needs to consider is statutory payroll compliance. Payroll requirements must be followed regardless of the industry, be it manufacturing, retail, IT, or any other.

Payroll distribution, broadly speaking, is the procedure used to manage employee compensation. However, payroll is more than just paying salaries. Businesses must follow several laws and regulations passed by the Indian government to continue to comply with labor laws.

Why do we need Statutory Payroll Compliance?
It is primarily to protect the rights of the employees and ensure they get their fair share to lead a content life. This compels organizations to adhere to policies such as minimum wage. It also assures employees protection from being overburdened with work in poor conditions

By complying with these laws the organization can avoid penalties, enjoy protection from unreasonable demands from trade unions, and in general mitigate risk. These laws set by the government help companies profit from a motivated workforce. It prompts the employees to put more focus and dedication to their tasks. Plus, with these benefits in place, it is easier to attract the best talent available in the job market.

Let’s have into these acts and learn about them in brief. Keep in mind that these acts can vary from state to state.

Advantages of Statutory Compliance for the organization:

Avoiding penalties
Protection from arbitrary demands from trade unions
Protects the company from legal troubles
Helps you increase awareness related to compliance

Employee Salaries and Benefits

Payment of Wages Act

This act ensures that companies pay wages on time. Keeping wages unpaid for more than a month carries penalties. As per the provisions of the Payment of Wages Act, 1936, wages need to be paid to employees before the expiry of the 7th day of the last day of the wage period, where the number of employees is less than 1000. In case the number of employees is less than 1000, wages must be paid before the expiry of the 10th day of the last day of the wage period. The preferred mode of salary under this act is cash, cheque, or directly depositing it in the bank.

Minimum Wage Act

It is a central legislation that fixes the minimum wage rate for employees. This will differ from state to state and sector to sector. Provincial governments also take part in drafting this act. There are a number of factors that affect the minimum wage of a state, such as the cost of living, the wage period (whether it’s hourly, weekly, or monthly), and the type of job. By doing so, employers ensure their employees are not exploited, that they are remunerated for their work and that they live lives of dignity.

Bonus Payment

Under this act, workers in factories and organizations with more than 20 employees are entitled to annual bonuses. It takes into account the salaries of employees and the profits of the organization when calculating the salary.

Maternity Benefits

Women who are pregnant are eligible for fully paid leave from work under the Maternity Benefits program. Employers with more than 10 employees are subject to it. In order to qualify, female employees must have worked for the establishment for at least 80 days in the past year. Based on her average daily wage on the days she is absent, calculations are made. This is applicable to women working in factories, plantations, mines, government establishments, and any other establishment that follows the rules of the central government.

Labour Laws for Social Security and Industrial Relations

Employee State Insurance Act (ESI): This act helps employees when they face unexpected challenges. These can include medical emergencies or disability situations related to the workplace. ESI is mandatory for companies that have more than 10 employees working in a non-seasonal factory. The ESI Scheme is a self-funding program. Employer and employee contributions are primarily used to support the ESI funds, which are provided monthly at a fixed percentage of salaries received. State governments are also responsible for 1/8th of the cost of medical benefits, as stated in the FAQs. But it is only applicable to those who are earning less than or up to Rs. 21,000 per month. Each contribution cycle is of 6 months, with the employer paying 3.25% and the employee contributing 0.75%. Once the employee crosses Rs. 21,000, they are no longer applicable for ESI.

Employees Provident Fund (PF)

This is the most significant contribution to social welfare for an employee. Both the employer and the employee contribute 12% of their basic pay and DA to the employee’s retirement fund. An employee’s contribution towards their PF is eligible for tax exemption. It is mandatory for companies with more than 20 employees to comply with PF. Non-compliance with PF can result in heavy fines and, in worst-case scenarios, imprisonment.

Labour Welfare Fund Act

This act enhances the conditions of laborers in certain industries. Improving workers’ working conditions, providing social security, and improving their living standards, aim to increase their quality of life. This varies from state to state. It’s the state labor welfare board that will decide on the amount and frequency of the contribution. There are 16 Indian states where this is applicable and 21 states where it’s not. Make sure you find out whether this is applicable in your state.

Gratuity

The combination of the gratuity and provident fund creates an attractive package for the employees’ safety and welfare. As statutory compensation, gratuities are among the most important regulations for a company. It is given by the employer to an employee who has completed a minimum of 5 years in their organization.

Tax Liabilities

Tax Deduction at Source (TDS) is undoubtedly one of the most crucial parameters to adhere to. It’s suited for various streams of income, including salaries, interest, and commission. The taxation depends on the individual earnings of the company. TDS for the employee is only calculated when the individual earns more than 2.5 lakhs annually.

Statutory compliance can make or break a company’s reputation. There are tons of rules and regulations involved, and these have to be adhered to perfectly, every time. It would be a wise decision for a company to spend enough resources that can help them maintain a spotless compliance record. In order to manage the demanding regulatory environment, you can get in touch with Labour Law consulting firms that will protect you against non-compliant issues.

The Role of HR in Ensuring Statutory Compliance

Human Resource (HR) professionals need to be kept abreast of changing labor laws to stay compliant since changes affect organizations at various levels. Being up to date on any amendments to minimum wages, ESI contributions, or tax slabs is important for you.

Consulting expert advice from labor law consultants such as Prompt Personnel can assist you in being compliant conveniently if you’re unable to keep up with the government’s constant policy updates.

The Role of Labour Law Consultants in Payroll Compliance

In India, laws and regulations are constantly changing, and it can be quite challenging to manage statutory payroll compliance. Legal compliance in all ways is made possible by having experienced labor law experts such as Prompt Personnel, all without disrupting business operations.

100% compliance with the law without disrupting business operations.
Proper payroll processing in accordance with statutory
To make your business aware, give frequent reminders about labor law.
Reducing risks and avoiding

Conclusion

In India, rules and laws keep changing, and it can be quite challenging to manage statutory payroll compliance. Spending money on payroll compliance today will spare your business legal issues and financial losses in the future.

Need expert advice? Call Prompt Personnel today for professional labor law consulting services!

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How can you build a Proactive HR strategy?

by Prompt Personnel | Jul 8, 2022 | Human Resources

Human Resources professionals are increasingly becoming accepted as strategic business partners with a seat at the highest levels of leadership in organisations today. The arrival of social networking and new-age digital technologies has resulted in human resources specialists delivering value and delivering it quicker than before, often with a global reach.

While many small business owners don’t start with the intention of facing human resources issues, once they begin hiring staff and managing further individuals within their businesses, they often notice themselves facing multiple challenges.

Taking the time to be proactive and carefully considering human resources as a vital area today and in the future can go a long way to keep your business ahead of the game.

What is Human Resource Planning?

Human resource planning ensures how to adequately satisfy the organization’s operational goals, matching the right individuals with the right skills at the right time. It is necessary to understand what your organization needs currently at the same time understand what the market demands. Accordingly, you can plan how to offer flexibility to the current employees and future hires. Each company’s set-up can look slightly different, betting on its current and future needs; however, there’s a basic structure that you need to follow to confirm you’re on the right track.

What’s a Proactive HR Strategy?

Proactive HR strategies aim to identify potential problems and prevent or resolve them before they occur by studying business objectives and goals. Instead of investing hours in resolving a conflict when it arises; it’s better to adopt a proactive HR strategy that can help you stay prepared in advance and handle situations more efficiently.

Effective ways to build a Proactive HR Strategy

A proactive HR strategy helps companies adapt to market fluctuations, which is essential for growth in uncertain times. Here are strategies that will help you build proactive HR strategies for your organisation.

1. Proactive HR starts with conversations

To develop proactive HR methods, it is essential to own discussions with fellow members of your leadership team concerning the company’s mission and vision. In these conversations:

Discuss what your company needs to fuel business growth.
Examine the gaps between your organisation’s current state and your company’s goals.
Determine strategies that can help your company close those gaps.

2. Understanding all aspects of the company by meeting with all the levels

HR Managers should be ready to work with managers across varied departments to understand their needs. The meetings should cover everything from staffing to training to developing effective ways to achieve the upcoming goals of the organisation.

Specifically, this allows the HR leader to develop holistic policies for managing change, rewarding accomplishments, training and development, regulating costs, and addressing worker concerns more satisfactorily. Similarly, knowing sales forecasts, from the respective sales & marketing department leaders, will help HR Managers forecast the long-term staffing requirements of the company.

3. Consider rolling interview cycles

You probably have a pool of candidates, even when you’re not actively posting an opening. Review this database periodically, and consider holding rolling interviews with candidates whose expertise or skills are of interest. Segregate the applications into categories such as shortlisted, rejected, waitlisted etc. Keep such applications on file to reduce the need to advertise for future roles, anticipate the areas where you may need staff to meet demand, and maintain productivity.

4. Identify Leaders And Gaps In teams Impacting Both Growth And Decline

It’s okay for an organisation to own gaps and blind spots; however, it’s unacceptable not to take action and bring change. A proactive HR team frequently seeks out these cracks in team management and fills them up before they cause a significant internal problem.

They not only facilitate and enhance the effectiveness of structured leaders but also identify rising leaders with high potential, giving them development opportunities and coaching.

Conclusion

The effective ways of building a proactive HR strategy are just the beginning of a long list of why each small business needs a proactive HR department. Although additional costs may be related to bringing on board HR consultants, it is worth the time and investment for all that the right HR team brings to your business. Prompt Personnel has been an industry expert for the past two decades, and our HR consultants in Mumbai can help you with staffing solutions and the right HR strategies for your organisation.

How Companies Can Get Benefits Of Workplace Flexibility In Multiple Ways

by Prompt Personnel | Jun 30, 2022 | Human Resources

The conventional methods of luring top talent with salary bumps have become less effective because of rigid or non-existent flexible working arrangements. The coronavirus has impacted the worldwide workforce. Safety protocols and distancing measures compelled us to adapt, with technology driving force behind all changes. We now have virtual spaces, which provide a safer and more efficient opportunity for physical spaces.

Flexibility in working policy is defined as an agreement among employers and employees and has 3 components:

Employees can choose where they work.
They can create their work schedules.
They schedule their workday however they want.

How Do The Companies Benefit By Providing Flexibility?

Increase In Productivity

There are many advantages of working at home and flexible hours. This maximised productivity, specifically in work that can be accomplished outside the office.

Prioritisation Of Mental Health

Both companies and employees alike have had to cope with the pandemic. One of the advantages of flexible work arrangements is that it promotes a healthy work-life balance and brings more attention to mental health. By incorporating flexible arrangements, employees can benefit from improved mental health.

Pivoting To Hybrid Work

A hybrid work setup may be the quality way for companies to attract and retain talent. It will provide employees flexibility and the choice to keep working remotely or in the office. A recent April 2022 showed that 77% of companies had adopted the hybrid workstyle.

Flexible Working Arrangements Help Recruitment

Recruitment is the main key area for employers, so presenting as an understanding company that provides flexibility and trust and accommodates its employees can upgrade the company’s popularity in the market. By making the flexible working arrangement a success, companies can attract employees to work.

What Are The Problems In Attracting Talents Due To No Flexibility?

But there are a lot of employees who want flexible hours but don’t have access to it.

The Lack Of Flexibility:-

Lack of flexibility places a vast burden on how employees take care of others, including children and ageing parents. A survey on LinkedIn shows that 83% of women are considering quitting their jobs because they are not offered the right flexible policies.

Lack of flexibility also significantly impacts employers’ potential to care for themselves. Younger workers, in particular, struggled with this; 39% of Millennials reported that their workday’s structure makes it challenging for them to make time for workouts and healthy living.

We found that a loss of flexible work arrangements can also harm the company’s overall performance and productiveness.

Employers can enhance employee engagement and maintain quality people by presenting flexible work arrangements

The Bottom Line:

Companies inclined to offer a flexible work arrangement demonstrate a dedication to their employees and ultimately benefit with higher productivity, committed employees, and a successful organisation. Flexibility is what the employees value the most out of all. With the right tools and a progressive, flexible work policy, recruitment teams will have a powerful draw for future talent while simultaneously giving current employees motivation and engagement.

Prompt Personnel established in 1997, is one of the staffing companies relentlessly delivering reliable and seamless end-to-end HR services to our partners. We are currently engaged with over 160+ clients in IT and Non-It sectors handling a huge Temporary and contractual staff deployed at over 2200+ locations in 28 states and 5 UTs. With 2 decades of staffing expertise, we at Prompt Personnel have mastered human resource management as a service and provide customized solutions as per our client’s needs. We aim to provide services encompassing the entire life cycle of your workforce – right from hire to retire.

Get To Know How A Replacement Strategy Can Work for Your Business

by Prompt Personnel | Jun 27, 2022 | Human Resources

Employees on your internal team bear a great deal of responsibility; therefore, you must assure the hired team performs as expected and has adapted well to the culture of the company. But there will be times when the candidate is not able to adapt well or perform well that’s the time the company should let them go.

Of course, you don’t want their absence to cause an enormous uproar, resulting in disgruntled clientele and interrupting the flow of business. The person’s leaving will be noticed, but the disruption should be minimal. Use these five techniques to replace an employee.

When is the Optimum Time to Start thinking about Replacements?

Before an employee retires, it’s best to start thinking about successors. That way, you won’t have to scramble for a replacement at the last minute. It’s never too late, though, to start thinking about replacements. Even if an employee has already gone, you can appoint short- and long-term replacements to take up their responsibilities until a permanent replacement can be located. You can also appoint staffing companies in Mumbai for professional assistance on temporary staffing.

Why is it important for organizations to start thinking about replacements?

In order to keep the competitive edge
Because of economic considerations
To fulfil customer requirements
To get the most out of expansion opportunities
To progress and accomplish

How Does Replacement Planning Benefit The Business?

Replacement planning focuses on identifying an immediate need for a specific role. It acknowledges “backups” for roles and is more of a necessity-driven response. Replacement planning is traditionally reserved for top-level positions, but it may be applied to any critical roles within an organization with the help of HR consultants in India.

The terms “replacement planning” and “succession planning” are frequently used interchangeably. It does not, however, have to be determined as a substitute for succession planning.

If the company has a succession plan in place, the replacement may have already been identified, or it could be a step in the present process. Even if the firm is using talent pools for staff growth, replacement planning might add benefits.

What steps should you take to put your employee replacement plans into action?

Staffing companies in Mumbai believe that it’s critical to put your replacement chart into action once you’ve finished it. This can be implemented in a variety of ways, for instance:

Keep your staff informed about your plans.
Employee education is important.
Substitution plans are made.
You can ensure that your replacement charts are successful and support the smooth operation of your organization by putting these procedures in place.

Getting HR services in Mumbai and communicating with your staff is a key part of implementing your replacement plan. Hold meetings, send emails, or display your plans in a conspicuous spot to do this. This way, your personnel will be aware of your intentions and will know what to do if they are called upon.

Prompt Personnel: Put Your Plans into Action with The Leading HR Consultants in India.

Prompt Personnel established in 1997, is one of the leading people-oriented HR solutions companies relentlessly delivering reliable and seamless end-to-end HR services to our partners. Enterprises benefit from Prompt Personnel’s cost-efficient, full-service, and adequate staffing services. We have been HR consultants in Mumbai for over two decades, and our subject experience and comprehensive understanding assist clients with their end-to-end HR needs. We aim to provide services encompassing the entire life cycle of your workforce – right from hire to retire. Know more about how we can help you with your HR & staffing needs by sharing your requirements with us!

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