Human Resource Management: Social Issues And Legal Context

                                                  Written by Akansha Jain

ABSTRACT

Human resource managers are well positioned to play an instrumental role in helping their organization achieve its goals of becoming a socially and environmentally responsible firm – one which reduces its negative and enhances its positive impacts on society and the environment. Further, human resource (HR) professionals in organizations that perceive successful corporate social responsibility as a key driver of their financial performance, can be influential in realizing on that objective. In this article, one can understand that every manager has some role relating to human resource management.  As a result, this article is equally important to someone who wants to be an HR manager and to someone who will manage a business. It examines in detail the development and enforcement of anti-discrimination laws in India . It also explores the role of the legal environment in impeding the application of social-science knowledge to advance the practice of human resource management (HRM).

INTRODUCTION

What Is Human Resources?

Every organization, large or small, uses a variety of capital to make the business work. Capital includes cash, valuables, or goods used to generate income for a business. For example, a retail store uses registers and inventory, while a consulting firm may have proprietary software or buildings. No matter the industry, all companies have one thing in common: they must have people to make their capital work for them.

What Is HRM?

 Human Resource Management is the process of recruiting, selecting, inducting employees, providing orientation, imparting training and development, appraising the performance of employees, deciding compensation and providing benefits, motivating employees, maintaining proper relations with employees and their trade unions, ensuring employees safety, welfare and healthy measures in compliance with labour laws of the land.  As a field, HRM has undergone many changes over the last twenty years, giving it an even more important role in today’s organizations. In the past, HRM meant processing payroll, sending birthday gifts to employees, arranging company outings, and making sure forms were filled out correctly— in other words, more of an administrative role rather than a strategic role crucial to the success of the organization.

Human Resource Management involves management functions like planning, organizing, directing and controlling.

• It involves procurement, development, maintenance of human resource
• It helps to achieve individual, organizational and social objectives
• Human Resource Management is a multidisciplinary subject.  It includes the study of management, psychology, communication, economics and sociology.
• It involves team spirit and team work.

• It is a continuous process.

Behind production of every product or service there is an human mind, effort and man hours (working hours). No product or service can be produced without help of human being. Human being is fundamental resource for making or construction of anything. Every organisation desire is to have skilled and competent people to make their organisation competent and best.

Among the five Ms of management, i.e., men, money, machines, materials, and methods, HRM deals about the first M, which is men. It is believed that in the five Ms, “men” is  not so easy to manage. “every man is different from other” and they are totally different from the other Ms in the sense that men possess the power to manipulate the other Ms. Whereas, the other Ms are either lifeless or abstract and as such, do not have the power to think and decide what is good for them.

HR managers have a big role in shaping how a company grows. Right from recruiting, inducting, training and development and later to performance assessment and grievance resolution, they are responsible for performance, retention and satisfaction level of employees.

The importance of human resource management can be discussed by Yodder, Heneman and others, from three standpoints, viz., social, professional and individual enterprise[1].

1. 1. Social Significance: Proper management of personnel enhances their dignity by satisfying their social needs. This is done by:

(i) maintaining a balance between the jobs available and the jobseekers, according to the qualifications and needs;

(ii) Providing suitable and most productive employment, which might bring them psychological satisfaction;

(iii) making maximum utilization of the resources in an effective manner and paying the employee a reasonable compensation in proportion to the contribution made by him;

(iv) eliminating waste or improper  use of human resource, through conservation of their normal energy and health; and

 (v) by helping people make their own decisions, that are in their interests

2. Professional Significance-. By providing a healthy working environment it promotes teamwork in the employees. This is done by:

(i)  maintaining the dignity of the employee as a ‘human-being’;

(ii)  providing maximum opportunity for personal development;

(iii)  providing a healthy relationship between different workgroups so that work is effectively   performed;

(iv)  improving the employees’ working skill and capacity;

(v) correcting the errors of wrong postings and proper reallocation of work.

3. Significance for Individual Enterprise: It can help the organization in accomplishing its goals by:

(i) creating the right attitude among the employees through effective motivation;

(ii) utilizing effectively the available goals of the enterprise and fulfilling their own social and other psychological needs of recognition, love, affection, belongingness, esteem, and self-actualization. Dynamic and growth-oriented organization do require effective management of people in a fast-changing environment. Organizations flourish only through the efforts and competencies of their human resources.

Employee capabilities must continuously be acquired, sharpened, and used. Any organization will have proper human resource management

 (i) to improve the capabilities of an individual;

(ii) to develop team spirit of an individual and the department; and

(iii) to obtain necessary cooperation from the employees to promote organizational effectiveness.

SOCIAL ISSUES IN HUMAN RESOURSE MANAGEMENT       

Human resources management involves more than recruiting, hiring and compensating full-time employees. Most current HRM functions also concern themselves with the health and well-being of all staff members and their concerns. Employees in businesses of every size demand that their employers pay attention to societal issues. In addition to growth and financial success, organizations have become accountable for their impact on society and the environment. The HRM function must be concerned with delivering positive results related to the company’s people, the planet and the long-term profit. As such, HRM plays a role in environmental stewardship, workplace responsibility, human rights protection and good corporate citizenship.

Changing Demographics

Traditionally, companies drew their labor pool from local residents. As technology makes it possible for personnel to work from where they live and whenever they want, a business can hire workers from across the globe. This means that companies need to account for their differences, as well. As older workers age, but remain in the workforce, a business needs to accommodate their unique concerns related to health, retirement and training on new tools. HR trends, including outsourcing, off-shoring and contingent worker strategies typically impact a business, too.

Employee Rights

Due to the increasing concern around privacy, HRM needs to be aware of social issues related to data security and privacy. Employers need to comply with local, state and federal regulations that ensure workers have a safe place to work. Effective leaders establish and communicate the standards for business conduct to maintain a highly ethical behavior for all. Illegal activities, such as fraud, theft and deceit, can not be tolerated at any level, if a company wants to be successful for the long term.

Work and Family

Work and life balance play an important role for most employees. Offering daycare for children and elders attracts workers with those responsibilities. Job sharing, rotation, leave, flexible hours and alternative work schedules make it possible for workers of every age and level to flourish at a small business. When people get help managing their personal lives, they can focus on work when they’re on the job. Stress, tension and interpersonal conflict tend to diminish. Even small companies can provide resources to their employees in terms of health and wellness. For example, the Wellness Proposals website provides free handouts, brochures and booklets.

Social Media Technology

Job boards and search engines don’t necessarily enable a company to find high-quality candidates. University graduates and other job seekers increasingly use social media to make connections and find employment. Employers also can use these mechanisms to attract and retain workers. Social media tools for business people, such as LinkedIn, allow busy professionals to create a profile and build a network of productive relationships.

THE LEGAL CONTEXT OF MANAGEMENT OF HUMAN RESOURCE

Laws are designed to reduce employment discrimination and to regulate labour standards have a strong impact on the management of human resources in organizations.

Law has a very important role to play in what any HR manager does in a day, though it may not be always apparent. For instance, hiring is accompanied by contracts and possible negotiation. Firing may require one to follow provisions of different contracts, ensure that any intellectual property created by an employee or a consultant is protected and secured in favor of the company and that proper disciplinary proceedings took place if someone is being fired for a breach in the code of conduct, sexual harassment etc. Many HR managers perform these tasks without having any inkling about the legal underpinnings of these functions, especially at a junior level. This can be quite risky from the company’s perspective.

This is one of the primary reasons why every HR course needs to have a legal module. However, this is usually covered in the way that very scared patients go through a root canal. One closes their eyes through the ordeal and try to forget the experience as soon as it is over. With exceptions, of course, most fresh candidates who have specialized in HR have precisely little practical knowledge about labor and employment laws, or any other law that may be relevant to their work.

However, as one goes up the chain, legal knowledge becomes indispensable.  Let’s say one is drafting a leave policy for a company, and fail to check the relevant Shops and Establishments Act of the state, one will almost certainly get it wrong. The consequence can be paying heavy fines by the company if an inspector comes visiting, a potentially negative report in the media, and one’s bosses being very cross at your lack of relevant technical knowledge thereafter.

If , for example. an organization has more than 25 or more employees, Employment Exchange (Compulsory Notification of vacancy) Act, 1959 mandates a private establishment to give a public notification to certain employment exchanges. Most HR managers have no clue about this law and their employers may have to end up paying big fines and dealing with legal hassles because of non-compliance.

Human resource personnel are often the first ones to register or discover internal turmoil, the decline in productivity of individuals, unhealthy leadership, retention failures, even corruption and nepotism. Most of such issues have various legal implications and angles that need to be considered at a senior level to be addressed. When disastrous and expensive legal proceedings are assessed retrospectively, it is often found that the root was in unaddressed concerns. A good HR can see these concerns ahead of time and address them, therefore saving the resources of the company in a big way.

For example, In a company’s employment agreement there is a poor or unenforceable non-compete clause. This means that over a period of time employees will figure out that the company is not in a position to enforce non-compete and many may join competitors, leak sensitive data and lead to major brain drain for a company.

This can be very well avoided by a smart and legally aware HR manager who fixes that clause, ensures that there is a bankable arbitration procedure to enforce the clause and create awareness amongst employees about how serious the company is about enforcing the non-compete obligation.

Here is a list of statutes and regulations for an HR manager that may help an organization succeed:

Right against discrimination at the workplace:

It is the right of every citizen of India to be indiscriminate.  According to article 16 (2) of the Indian Constitution, no citizen can be discriminated against, or be ineligible for any employment or office under the state, on the grounds only of religion, race, caste, sex, descent, place of birth or residence or any of them. Adherence to the rule of equality in public employment is a being feature of Indian Constitution and the rule of law is its core, the court cannot disable itself from making an order inconsistent with article 14 and 16 of the Indian Constitution.

Principle of Equal pay for Equal work

It is the duty of the employer to pay equal remuneration to men and women workers for same work or work of a similar nature as per the Equal Remuneration Act, 1976[2].  Section 5of the Act prohibits the employer from formulating a hiring process putting women on disadvantage on account of their gender which is in reference to the work that is same or similar to that which is offered to men and even in respects of transfers and promotions.

Remuneration

Discrimination may also exist in the payment of compensation to the employee which includes salary, overtime pay, bonus stock options, life insurance and other benefits.

1. Sexual Harassment (Prevention, Prohibition and Redressal) Act, 2013[3]

The 6 year old act has taken private business sector by the storm over the last few years. In most of the cases, HR managers are the first recipient of a sexual harassment complaint. They are also actively involved in drafting of Sexual Harassment Policies and formation of Internal Complaints Committee. HR managers are also responsible for the performance of the Internal Complaints Committee. Hence, even if the HR manager is not part of sexual harassment committee, he or she should have a good understanding of the law, compliances and procedures involved. Implementing sexual harassment laws at the workplace can be quite a challenge.

2. The Factories Act, 1948[4]

Factories are often equated with labour issues and inspector raj. Be it for numerous compliances or for or any regulations related to working conditions, knowledge of this act is necessary for HR managers. More and more large companies, especially MNCs are now approaching consultants and training institutes that can train their HR managers about Factories Act compliances, though it is not per for course for SMEs and family businesses yet. This act prescribes the basic rights and interests of the workers, and the guarantee to provide them with basic amenities like proper sanitation, ventilated work space, safety for using machinery etc. The maximum working hours are prescribed are not more than 48 hours in a week. Compliance with this act can act as a boon for this company as it can effectively avoid labour conflicts in the future.

3. The Employees Provident Fund Act, 1947[5]

This act is aimed at providing a kind of social security to the industry employees. If one has an employee which is working in their factory or in association with the work of their factory, he is entitled to become a member of this fund. The benefits like retirement pension, medical care, housing, family obligations, education and benefits arising out of insurance, rights of older employees post-retirement, are few aspects which are covered under this act.

4. The Apprentices Act, 1961[6]

As per the Oxford dictionary, an apprentice is a person who is learning from a skilled employer, having agreed to work for a fixed period of time. If one’s organization offers apprenticeship then you need to make the policies for them as per this act. The act allows one to take casual leave for 12 days, medical leave of 15 days and extraordinary leave of 10 days in a year.

5. The Maternity Benefit Act,1961[7]

Maternity benefits act is perhaps the most known act in this list. This act is aimed at providing full benefits and protection to the mother and the child during the time of maternity in the form of paid maternity leaves.

6. The Workmen’s Compensation Act, 1923[8]

If one is an HR, one need to know the kind of liabilities their organization might have in case of any labor accident. Although, there are security departments in the factories which ensure that every individual is following the safety guidelines, however, as an HR it is their responsibility to ensure that the necessary tools and equipment are provided and complied with. One needs to know that all of the regulations and guidelines are created in adherence to this act so that unnecessary future liabilities can be avoided.

It is an act aimed to provide financial protection to the workers or their dependents, in case of an injury or accident at the time of work. It provides for financial compensation in the case of any such accident. In case of non-compliance, the employer is liable for a criminal offense.

7. The Payment of Gratuity Act, 1972[9]

Gratuity is a part of the salary, received by the employees from their employers as a token of gratitude for the services performed by them during their employment tenure. It is one of the many retirement benefits that they are entitled to.

An employee is entitled to gratuity if he/she has completed one year of service in an organization. The HR manager is required to know about this act, so that in case of unfortunate death of an employee who has completed one year of continuous service in a company, or in case of retiring individuals, basic gratuity is awarded.

8. The Payment of Wages Act, 1936[10]

As an HR it is your responsibility to see that the due wages are credited to the workers on a monthly basis and without unnecessary deductions. This act is a guide to ensure that any such discrepancies can be avoided. This act provides standards for assessing the remuneration of the employees and ensures that the salaries are governed as per the industry standard. This is an act meant to give the individual and their employee equal bargaining power. It is a must know to avoid any future conflicts.

9. The Industrial Disputes Act, 1947[11]

Right from the cap on working hours to the provision of conciliation between the company and its employees, this act has all of it covered.

With an aim to settle the employer-employee disputes amicably, it is a tool for a peaceful resolution. It is utmost important for an individual to ensure that the employee is given at least a six weeks notice before getting fired. Mostly the issues such as wages, holidays, working hours etc, or anything that can cause a dispute, which must be adhered to form a part of the act.

10. State Wise Factories and Establishments (National, Festival and other Holidays) Act,  read with State wise Factories and Establishments (National, Festival and Other Holidays) Rules:

While deciding the leave policy, one is required to consciously comply to these rules. These rules decide the national and state leaves which are based upon the religious and cultural beliefs of a particular state. As an HR it is his responsibility to ensure that cultural sentiments of any employee is not hurt and their happiness quotient in your organization is on a constant high.

11. The Payment of Bonus Act, 1965[12]

As the name suggests, this act is aimed to provide bonus to the employees of certain industries and establishments. Every employee, irrespective of skilled or unskilled work is entitled to a bonus every accounting year if his salary is above 15,000 and he has worked for a minimum of 30 working days in a year.

12. The Employees State Insurance Act, 1948[13]:

This statute acts as self-financing security for every employee in India. The employer is required to contribute 4.75% of the 6.5% of insurance to all the employees who are earning 15,000 or less per month. This act provides health and medical benefits to all the employees and upto 6 dependents of the employees. In case of a tragedy, funeral, accident, medical contingency, injury, maternity and sickness, an employer is required to cover the expenses through an insurance as per this act.

13. Child Labour Regulations (CLR)

One of the most important regulation, the government is more proactive than ever to ensure that child labor is completely banned in India. However, the latest amendment in 2016 has relaxed the guidelines a little. The employment of children below the age of 14 in all occupations and processes is prohibited. However, there are now certain exceptions to the law. If one is working in the entertainment industry or a non-hazardous industry, children above the age of 14 years can work after the school hours and if all the amenities under the law are provided to them.

Apart from all of the above-mentioned laws, there is a list of laws, that a company needs to comply with, which are the sole responsibility of the HR managers.

Challenges of HRM in Indian Society

1. 1. Globalization: – Growing internationalization of business has its impact on HRM in terms of problems of unfamiliar laws, languages, practices, competitions, attitudes, management styles, work ethics and more. HR managers have the challenge to deal with more functions, more heterogeneous functions and more involvement in employee’s personal life.
2. Corporate Re-organizations: – Reorganization relates to mergers and acquisitions, joint ventures, take over, internal restructuring of organizations. In these situations, it is difficult to imagine circumstances that pose a greater challenge for HRM than 29 reorganizations itself. It is a challenge to manage employees’ anxiety, uncertainties, insecurities and fears during these dynamic trends.
3. New Organizational forms: – The basic challenge to HRM comes from the changing character of competitions. The competition is not between individual firms but between constellations of firm. Major companies are operating through a complex web of strategic alliances, forgings with local suppliers etc. These relationships give birth to completely new forms of organizational structure, which highly depend upon a regular exchange of people and information. The challenge for HRM is to cope with the implications of these newly networked relations more and more, in place of more comfortable hierarchical relationships that existed within the organizations for ages in the past.
4. Changing Demographics of the Workforce: – Changes in the workforce are largely reflected by dual-career couples, large chunk of young blood between age old superannuating employees, working mothers, more educated and aware workers etc. These dynamic workforces have their own implications for HR managers and from HRM point of view is a true challenge to handle.
5. Changed employee expectations: – With the changes in workforce demographics, employee expectations and attitudes have also transformed. Traditional allurements like job security, house, and remunerations are not much attractive today, rather employees are demanding empowerment and equality with management. Hence’ it is a challenge for HRM to redesign the profile of workers, and discover new methods of hiring, training, remunerating and motivating employees
6. New Industrial Relations Approach: – In today’s dynamic world, even unions have understood that strikes and militancy have lost their relevance and unions are greatly affected by it. The trade union membership has fallen drastically worldwide and the future of labor movement is in danger.

The challenge before HRM is to adopt a proactive industrial relations approach which should enable HR specialist to look into challenges unfolding in the future and to be prepared no convert them into opportunities.

CONCLUSION

Human resources managers oversee the most important component of a successful business – a productive, thriving workforce. This requires viewing people as human assets, not costs to the organization. As with any other asset, a talented workforce can be used strategically to add value to an organization.

It is important that an HR manager is well aware and making significant contributions through various policies. Legal awareness and human resources if combined can produce a very inclusive workspace which could significantly enhance a company’s productivity.

[1] http://shodhganga.inflibnet.ac.in/bitstream/10603/76404/10/10_chapter%201.pdf

[2] EQUAL REMUNERATION ACT, 1976 [Act 25 of 1976 amended by Act 49 of 1987]

[3] PART ll – Section 3- Sub-section (ii)

[4] THE FACTORIES ACT, 1948 ACT NO. 63 OF 1948 1* [23rd September, 1948.]

[5] THE EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 ¹ [(Act No. 19 of 1952)]

[6] Apprentices Act, 1961 [Act No. 52 of 1961¹ as amended by Acts 52 of 1964² , 25 of 1968³ , 27 of 1973⁴ , 41 of 1986⁵ and 4 of 1997⁶ ]

[7] THE MATERNITY BENEFIT ACT, 1961 ACT NO. 53 OF 1961 1* [12th December, 1961.]

[8] The Workmen’s Compensation Act, 1923 Act No. 8 of 1923 1* [ 5^th March 1923.]

[9] [NO. 39 OF 1972] [21st August, 1972]

[10] THE PAYMENT OF WAGES ACT, 1936 ACT NO. 4 OF 1936 1* [23rd April, 1936.]

[11] THE INDUSTRIAL DISPUTES ACT, 1947 ACT NO. 14 OF 1947 1* [11th March, 1947.]

[12] THE PAYMENT OF BONUS ACT, 1965 ACT NO. 21 OF 1965 [25th September, 1965.]

[13] [Act No. 34 of 1948]¹ [19th April, 1948]