Business Ethics & HR

Business Ethics are the Principles and standards that define accpetable conduct in Buisness.They consists of moral principles governing teh right & wrongs pof human conduct .

Companies do have a code of conduct that every employee has to sign but apart from that HR shud try to place a seperate Business Ethics Policy in the company which every employee shud sign and adhere to. All this will help to create a healthy and ethical environment in the organisations .

Following is a low-down of points that must be kept in mind while designing Policy ::

1) The policy should be aimed to direct the employees for do's and dont's .There shud not be anythg left out which provides a chance of escape .

2) There shud be a proper legal action laid in the policy ,if any breach of policy occurs .

3) Policy thus made should be made informed to all employees in the organisation and all supporting practices shud be adopted .


CSR (Corporate social responsibilty) is a new paradigm of business ethics which is being taken up by the organisations .CSR explains a manner in which a business is conducted and corporate contribution to peace and war against terror .

After designing the policy HR becomes liable to ensure that the policies are implemented strictly & seriously in the organisation .

ESI ACT ,1948

The Employee State Insurance Act 1948 provides for certain benefits to employees in case of sickness ,maternity and employment Injury and also make certain other provisions . The act extends to the whole of India and to all the factories(with 20 or more employees ) except the seasonal Factories .

Act makes cumpulsory that subject to the provision of act all employees in factories or establishment to which this applies shall be insured in the manner provided by this act .Such insured persons shall pay contribution towards Insurance Fund through their employers who will also pay their contribution . Such insured people will get certain benefits from the ESIC FUND .

ESIC Fund is used for the foll purposes ::

a) To pay for the benefits and provision of Medical Treatment .
b) To pay for the fees and allowances to the members of the corporation .
c) To pay for the salaries , leave , joining time allowance , travelling & compensatory allowances ,Gratuity & Pension .
d) For the establishments of Hospitals , dispensaries & other institutions.
e) To defray the cost of auditing accounts of corporations and valuation of assets & Liabilities .

ESIC Contribution ::

Rule 51 states that a total of 6.5 % of contribution has to be made .Out of which ER has to make 4.75% and 1.75 % has to be made by the employee .

Who all are covered under ESIC ??

All employees who earn < or =10,000 a month are to be covered under ESIC ACT .Any employee who earns > than 10,000 is not to be provided for any ESIC Benefits .

Incase if disabled employees the min limit is 25,000 per month and also for 3 years Employees contribution is paid by the Govt .

Some basic Info abt ESIC ::

1) Employees whose basic average daily wages during a wage period is Rs 15 or less than Rs 15 are exempted to make any contribution .

2) Principal employer shall pay in respect of employee whether directly employed by him or on contract . He can get the same recovered by the immediate employer later .

3) Only the employee's contribuition has to be deducted from employees wages and not the Employer's contribution .

4) If Principal employer fails to pay the amount then he is liable to pay simple interest of 12% pa or at such higher rate as specified in the regulation .

ESIC Insurance Court ::

All disputes relating to ESI are to be heared in ESIC Court .

Employee Benefits under ESIC ::

1) Periodical payments in case os sickness certified by a medical Practitioner ;
2) Periodical PAyments to an insured workmen in case of miscarriage or sickness arising out of pregnancy , confinement ;
3) periodical payment to an insured person suffering from disablement as a result of employment injury ;
4) Periodical payment to dependents of insured Persons ;
5) Medical treatment and attendence on insured person ;
6) Payment of funeral expenses on the death of insured person @ prescribed rate of RS 1500/- .

Provident Fund ,1952

PF act provides for PF , Family Pension fund & deposit Linked Insurance for employees in factories & other establishments.

Applicability of this Act ::

1) PF Act is applicable to all those organisation where 20 or more peopel are employed or were employed at any time during the last 1 year .

2) Central Govt may even give instructions even to apply provision of PF act to a company which employs < 20 people .

What if number falls below 20 ??

# An establishment to which act implies shall to be governed by this act even when the number falls below 20 .

# Even if for a single day number of employees was 20 the act will apply to it . However casual employees will not be taken but if an establishment employs temporary employees as a regular feature such employees cannot be considered as casual employees & thus will be counted .

Appropriate Govt :

It maybe central Govt or state Govt .

Contribution of PF ::

Rate of Contribution :: 12% of BAsic Wages +DA (if applicable )

Both ER & EE have to make equal contribution .

ER contribution have not to be deducted from the wages of member .

Gratuity Act

Gratuity Act applies to employees engaged in Factories , Mines , Oil fields , Plantation ,Ports ,Railways Companies , Shops & Establishment .

Gratuity Act is applicable in any company in which 10 or more persons are employed or were employed on any day for preceeding 12 months .Appropriate Govt means central Govt where an establishment has branches in more than one state or an estblishment under the direct control of central Govt .

Continuous Service ::

A person is said to be in continuous service for the last 1 year if...

a) he works for 190 days in case he is employed in mine /underground and if such business works < 6 days a week .
b) 240 days in any other case .

For the last 6 months if ....
a) he works for 95 days in case he is employed in mine /underground and if such business works < 6 days a week .
b) 120 days in any other case .

Seasonal Business ::

An employee of a seasonal estabvlishment shall be deeemd to be in continuous service if he has actually worked for not less than 75 % of number of days on which establishment was operational during suich period .

Who is an employee under this Act ??

a) Every employee except any person who holds a post under the central govt /state govt and is governed by any other act is an employee .

b) Teacher is not an employee :: Teachers are not intended to be covered by the definition of employee .

c) All establishment except apprenticeships are entitled to Gratuity under this act .

Superannuation :: The age @ which an employee should vacate the employment (or as fixed in contract of emloyment is superannuation . In any other case age of 58 years is fixed .

Payment of Gratuity ::

Gratuity is only paid once an employee leaves an organisation . EVEN IF HE HAS COMPLETED 5 YEARS in the company though he is eligible for gratuity but he cannot receive the Gratuity during his association with the company . Only when he ceases to be an employee he can claim Gratuity . This could be on employees death or permanent disablement due to accident or some disease .

Procedure to claim Gratuity ::

Application should be send to the ER within 30 days from the date when gratuity becomes payable .If the date of superannuation or retirement maybe known ee may apply to ER before 30 days . A NOMINEE may also apply with a written application within 30 days .


Gratuity Amount ::

Step 1) Once the gratuity becomes payable ER shall determine the amount of gratuity and give notice in wirting to the controlling authority and the EE . This has to be done irrespective whether the application is received or no .

Step 2) The amount has to be paid to the EE within 30 days and if ER fails to do so then he has to pay interest to the EE @ LONG TERM DEPOSITS .The interest has to be paid from the date when gratuity becomes payable till the time when it is finally paid .

Step 3) NO interest has to be paid if there is a delay due to tHE problem of an employee and when ER has received a written application from the controlling authority for the delay in the payment .

Calculation of Gratuity Amount :;

Gratuity = 15 days last drawan basic salary for each completed years of service .

Definition of wages while calculating Gratuity ::

1) Wages include all emoluments earned by employee in cash while on duty or on leave .
2) It includes DA .
3) It doesn't include any bonus , commision , HRA ,OT wages or any other allowance .
4) If food supplied by ER is added in cash form to EE salary it will not be included .

Will a manager or an employee working in managerial capacity be covered in Gratuity Act ??

Yes . Anybody even employed in maangerial or administrative capacity will be covered under the Gratuity Act .But any employee who is working with central govt or state govt and is governed by any other act or rules will not be covered under the Gratuity Act .