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What Are HR Policies and Procedures? A Complete Guide for Employers

What Are HR Policies and Procedures? How to Create Them for Your Company

Table of Content

Introduction
What Are HR Policies and Procedures?
Why HR Policies Are Important
Laws Governing HR Policies in a Company
How to Make HR Policies: Step-by-Step Guide
Common Mistakes to Avoid in HR Policies ​
Case Study
How Vishaal Consultancy Services Can Help You
Conclusion
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Introduction

Ever wondered what happens when employees aren’t sure about the rules at work? It may seem small, but confusion can quickly turn into disputes, low morale, and even legal trouble. And for employers, unclear HR policies can lead to financial risk, fines, or reputational damage.

For example, an employee at a prominent IT company was terminated despite excellent performance. The company cited misconduct without following transparent HR procedures. The court ruled in favor of the employee, showing that fair HR processes and proper documentation actually matter.

In this blog, we’re going to explore what are HR policies and procedures, why they matter, how to create HR policies in India, common mistakes to avoid, and a real-world case study showing why HR compliance is critical.

What Are HR Policies and Procedures?

HR policies are the formal rules and guidelines that define how your company handles human resource matters. These usually cover areas like:

  • Recruitment and onboarding
  • Attendance and leave management
  • Performance evaluation
  • Disciplinary actions and terminations

Together, they provide consistency, fairness, and legal compliance. Without them, decisions become inconsistent, employees get confused, and disputes can arise easily.

What is HR Policies and Procedures

Why HR Policies Are Important

HR policies aren’t just rules on paper, but a guide on how employees are treated, how managers make decisions, and how conflicts are handled. Without clear policies, even small issues can escalate into bigger problems affecting morale, productivity, and legal compliance.
Clear HR policies help your organisation in multiple ways:
  • Consistency: Makes sure everyone is treated fairly
  • Fairness: Reduces bias and discrimination
  • Legal Compliance: Keeps your company aligned with Indian labour laws
  • Efficiency: Streamlines HR processes and decision-making
  • Employee Trust: Builds confidence in management and strengthens relationships

A good HR policy of a company helps employees know what’s expected of them, improving morale, productivity, and retention.

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Laws Governing HR Policies in a Company

In India, HR policies must follow certain labour laws. Some important ones include:

    • Industrial Employment (Standing Orders) Act, 1946: Defines employment terms, discipline, and workplace conduct.
    • Shops and Establishment Acts (state-specific): Covers working hours, leave, and holidays.
    • Payment of Gratuity Act, 1972: Ensures employees receive gratuity after a certain period.
    • Payment of Bonus Act, 1965: Mandates fair bonus distribution to eligible employees.
    • Factories Act, 1948 & Labour Welfare Laws: Focuses on employee safety, health, and welfare.
Understanding these laws helps you make policies that are practical and legally compliant. Ignoring them can lead to disputes, fines, and lost employee trust.

How to Make HR Policies: Step-by-Step Guide

Creating HR policies might feel overwhelming, but it becomes manageable if you break it down. Here’s a step-by-step guide:

1. Identify the Key Areas

First, you need to figure out which areas need rules and focus on frequent situations or potential issues. Typically, this includes:
  • Hiring and onboarding
  • Attendance, leave, and working hours
  • Performance reviews
  • Disciplinary actions and terminations
Essentially, any process that impacts employees’ daily work should have a policy.

2. Check the Laws

Next, make sure your policies comply with Indian labour laws. It might feel tricky, but if your policies aren’t legally compliant, you could face disputes, fines, or reputational harm.

3. Draft the Policies

Write policies in simple, clear language. Each policy should include:
  • Purpose: Why the policy exists
  • Scope: Who it applies to
  • Roles and responsibilities: What’s expected
  • Procedures: Step-by-step instructions
  • Consequences: What happens if rules aren’t followed

4. Review and Revise

Ask someone else, like a manager or legal advisor, to review your draft. They might spot gaps you missed. And it’s okay to tweak things a few times. Policies should fit your company perfectly.

5. Share with Employees

Policies are useless if no one knows about them. Share emails, handbooks, meetings, etc. Get employees to acknowledge that they’ve read and understood them. This reduces confusion later.

6. Keep Updating

Things change—laws, job roles, company structure. Review policies at least once a year and update whenever necessary. Staying proactive helps you avoid legal and operational issues.
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Common Mistakes to Avoid in HR Policies

Even well-intentioned policies can fail if not designed carefully. Here’s a more detailed look at common mistakes:
  • Vague or overly complex language: Policies in legal jargon or long sentences are often ignored so keep them simple and clear.
  • Ignoring local labour laws: Not aligning with Indian labour regulations is risky and even small mistakes can cause legal trouble.
  • Not updating policies regularly: Outdated rules confuse employees and affect compliance, so review the policies at least yearly.
  • Poor communication: Policies must reach employees effectively. Announce the changes clearly, follow up, and get acknowledgments.
  • Lack of documentation for disciplinary actions: Not recording warnings or actions can weaken HR decisions and expose you to legal challenges.
By avoiding these mistakes, you can ensure your HR policies remain practical, effective, and legally sound.

Case Study

Context:

An employee at a prominent IT company was terminated despite excellent performance. The company cited misconduct without following transparent HR procedures, causing reputational and professional harm.

The Issue:

HR procedures were questioned because:
  • Defamatory language was used without proper proof
  • Transparent termination procedures were not followed
  • The employee was not given an opportunity to respond

Legal Outcome:

The employee challenged the termination in the Delhi High Court. The court ruled in their favor and asked the company to pay 2 Lakhs for the reputational harm.

Key Takeaways:

This case shows that HR procedures must always be fair, transparent, and legally compliant. Employers should avoid using subjective or defamatory language and ensure employees have the opportunity to respond before taking action. Proper documentation, clarity, and adherence to policy protect the company from disputes and reputational risk.
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How Vishaal Consultancy Services Can Help

Managing HR policies and practices in India can feel overwhelming. Vishaal Consultancy Services is here to make it easier. We can help you:

  • Draft HR policies that actually work for your company
  • Ensure compliance with Indian labour laws
  • Offer virtual HR services and ongoing HR advisory support
With our guidance, you can focus on running your business while we make sure your HR policies are solid, practical, and legally safe.
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Conclusion

Clear HR policies and procedures do more than just protect your company. They create a professional, fair, and structured workplace, guide employees, help managers make consistent decisions, and reduce risks. From recruitment to terminations, effective policies build trust, efficiency, and confidence.

If you want to protect your business and improve employee satisfaction, Vishaal Consultancy Services can support you. With expertise in labour law advisory, virtual HR, and ongoing support, your company’s HR processes remain compliant, practical, and effective.

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