Basic HR 101 For Startups

“Unlimited leave policy” “Beer bottles on every table” – these and others that startups do to attract talent.

Culture, specially at the initial stages of the company, is largely driven by the tone set by the founders.

Some of the cultural tones have an impact on the human resources policies and a few of those have a legal impact. How does one deal with an employee who has taken 2 months leave in a company which has unlimited leave policy? How does one deal with a tipsy co-worker, who passes a loose remark on a female colleague?

The notes written below is nothing new at all. But becomes important to the new entrepreneurs who believe they have to disrupt “everything” to stand-out.

HR-Policies

Image Credit: Gaebler.com

This post is meant somewhat as a cheat-sheet of HR things to be kept in mind /entrepreneur need to work on, at some relevant points in time.

Pre-hiring:

  • Background verification.
  • Relieving letter from previous employer, along with a copy of the full and final settlement with the previous employer.
  • In the good old days, there used to be a “conduct certificate” issued by the employer, along with relieving letter, which no one uses anymore.
  • Copy of the previous salary slips.
  • A quick check on obligations due by the candidate, to the previous employer.

Hiring:

  • Offer Letter, which has details of role, designation, salary (CTC, payroll structure), employment benefits such as insurance, date of joining and a few details such as leave, notice period at termination/ resignation, confidentiality, corporate ethics.
    • It is recommended that the offer letter clearly states that the candidate should not bring in any document, trade secret, proprietary information of the previous employer.
  • Offer of ESOP (employee stock options), while may be mentioned in the Offer Letter, has a separate set of compliances under Companies Act, which the company has to follow. A copy of the ESOP policy / scheme may be provided to the employee upon issuance of ESOP grant letter.

Upon joining:

  • Employment Agreement: A detailed agreement, which references the Offer Letter and describes the terms and conditions of employment. This Agreement can further include as annexures:
    • Non Disclosure Agreement with Employees- In some generic business, a clause on confidentiality in the Employment Agreement might suffice. However, for businesses which deal extensively on intellectual property or roles where a lot of company’s secret sauce is exposed or for companies where there is high democracy and openness, then it is recommended to a slightly detailed NDA (instead of just a clause in the Employment Agreement).
    • IP Assignment Agreement – Similar to above, if the company deals with creation of intellectual property (think of: codes, algo, schema- not necessarily inventions), then a separate IP Assignment Agreement may be required. In an employer-employee relationship, which is work-for-hire, all IP belongs to the employer. However, previous IP or IP created by the employee not part of employment does not belong to the employer and it is essential for the employee to detail those previous IP at the time of signing an employment agreement.
  • Copy of the Employee handbook: The Handbook consists of many governance related aspects. These are helpful in level setting expectations with employees. The Handbook generally gets built over a period of time. It starts with a few mandatory aspects and then develops into a larger set of guidance note over a period of the company’s business growth. Some of the usual points are:
    • Tone at the top – an overview by the founder
    • Equal employment opportunity
    • Categories of employment
    • Leave: Sick Leave, Earned Leave, casual leave. The process for taking leave.
    • Compensation practices
    • Performance appraisal, performance improvement plans
    • Reimbursement process – conveyance, travel, food, telephone
    • Grievance Redressal and disciplinary action
    • Policy for prohibition, prevention and redressal of harassment and sexual harassment (you can download our free handbook here)
    • Anti-bribery and anti-corruption policy
    • Email, internet and intranet usage
    • Usage of office equipment
    • Exit, termination, resignation – A lot of detail goes in here.

Ongoing:

  • A file for an employee, with employee’s details such as blood group, contact details of family for reaching out in case of emergency, a record of the above, some medical details, records of performance appraisal, etc. All of these are very personal and appropriate access control (Privacy policy) has to be in place.
  • Ongoing trainings including training on prevention of sexual harassment (down load free ebook here)
  • In some companies which still uses “Service Bonds” with employees, then maintainance of records of all training costs.

Exit:

  • A copy of resignation email/ letter
  • Calculation of full and final settlement and employee’s acknowledgment
  • Exit interview to re-iterate obligations of confidentiality, non-compete and the like.
  • Collection of all office equipment
  • Change of email passwords, social media handles, access cards, access to group internet/intranet storage
  • Revocation of power of attorney if any is granted
  • Change of bank signatories if any is granted
  • Issuance of relieving letter.

Each entrepreneur would have their own hack of complying with all this, until a full time HR person is hired. If you have anything more to add to this checklist, please leave a comment.

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