Introduction

In today’s business environment, organizations are faced with the

pressure to produce more with fewer resources. An organization’s success
depends upon its employees and it is that capital that is the largest fixed
cost. Producing more and decreasing the cost of that production is what
most organizations aim for. Human resources plays an important role
here because it is this department that must ensure the organization
attracts the best talented people at the lowest cost.

Competitive advantage is built on hiring the right people, whether in the

public or private sector, whether in the corporate world or in the world of
education. People are an “inimitable” or unmatched asset. The right
people and their skills are something that competitor organizations cannot
imitate. High caliber employees are the most valuable asset for any
organization. Finding the right people and putting them in the right jobs is
the most important challenge.

What is Recruiting?

Once you know how many human resources you need, management has
to find the places where these resources will be available. They must also
find a way of attracting the right people to the organization before
selecting suitable candidates for jobs. All of this is generally known as
recruitment.

Recruitment is “a process to discover the sources of manpower to meet

the requirements of the staffing schedule and to employ effective
measures for attracting that manpower in adequate numbers to facilitate
effective selection of an efficient workforce.” Edwin B. Flippo, author of
many personal management books, defined recruitment as “the process
of searching for prospective employees and stimulating them to apply for
jobs in the organization.”

Objectives of Recruitment
 1.To attract people with a broad range of skills and experiences
that will suit the present and future organizational plans.
2.To bring in new people with a new perspective to lead the
company.
3.To position new people with fresh ideas within all levels of the
organization.
4.To develop a culture that attracts competent people to the
company.
5.To search for people whose skills fit company values.
6.To think about ways of assessing psychological traits.
7.To seek out unique and unconventional talent.
8.To search for talent globally and not just within the company
(more so for large organizations).
9.To design entry salaries that compete on quality but not on
importance.
10. To anticipate what new positions might become
available and find people for these positions that do not exist
yet.
Recruitment Policy

The recruitment policy of any firm comes from the personnel policy of that
organization. The policy must include ways of motivating the employees
through internal promotions or improving employee loyalty by trying to
accommodate the retrenched or laid-off employees. It must also take in
account the situation of casual/temporary employees or dependents of
present/former employees based on their capabilities.

The following factors should be taken into consideration when deciding

and formulating recruitment policy.

They are:

1.Government policies
2.Personnel policies of other competing organizations
 3.Organization’s personnel policies
4.Recruitment sources
5.Recruitment needs
6.Recruitment cost
7.Selection criteria and preference etc.
Planning for Recruitment

Before interviewing for a job, the organization needs to ensure a number

of important steps are taken. These prior steps include the forecasting of
human resource needs, the description of individual job requirements and
appropriate recruitment channels. The HRM specialists, in the
organization, are likely to be particularly prominent (as are line
managers) when this is being done.

Factors Affecting Recruitment

Both internal and external factors affect recruitment. The external factors
include supply of and demand for human resources, employment
opportunities and/or unemployment rate, labor market conditions,
political and legal requirements, government policies, social factors, and
information systems.

Internal Factors

Preparing a detailed job description is necessary after identifying specific

human resource needs. The job description is a legal requirement and
assists the HR manager when selecting candidates. The direction the
company goes from there will depend greatly on the corporate
philosophy. For example:

– Will the company look internally or externally to fill its employment

needs?
– Does the company believe in hiring the most qualified candidates,
regardless of background, or does it wish to be an industry leader when it
comes to workforce diversity?

– Will the organization try to sell itself as a high wage, high search, or
high training organization as identified by Stigler?

Keeping the above questions in mind as well as existing company policies

and practices, gives the recruiter the necessary base from which to
proceed to the external environment.

External Factors

For legal, ethical, and practical reasons, it is important for the recruiter to
be very aware of the organization’s external environment. All of these
factors will play a hand in the recruiter’s strategy:

– Legal: The legal environment is constantly changing, as new laws and

regulations are passed. These affect all aspects of human resource
management. The recruiter must follow the rules to avoid unpleasant
government actions.
– Ethical: While ensuring the internal corporate philosophy, the recruiter
should follow the guidelines that keep and expand the company’s positive
corporate image.
– Practical: Many avenues are open for the recruiter when seeking
appropriate job candidates. Having updated information on the labor
market and economy on both a national and local level will improve the
efficiency of the effort.

All of the above considerations will lead to an efficient and effective

recruiting effort for the HR professional.

Internal Recruiting
Internal recruiting is the search for employees already in the organization.
This is the search for employees who have the abilities and the attitudes
to fulfil the requirements needed and to help the organization achieve its
objectives.

The Recruitment Process

Recruitment is the process of identifying that the company needs to

employ certain people to fill certain positions. Its aim is to hire the best
qualified candidates. These potential new employees must have the
suitable abilities to assist the organization in achieving its corporate goals.

The recruitment process works in a particular way. Applications and

resumes are received after the initial advertising for new employees. A
short list is made and those on it are asked to come in for an interview.
The interviewing structure can vary. For example, in some cases a
number of interviews will be done, in others the candidates may be asked
to do certain tests in order to assess their suitability. The candidate that is
chosen will receive an official job offer.

When the recruitment process has produced a number of applicants, the

important steps in selection are as follows:

– short-listing candidates for the next stage;

– test arrangements for the short-listed candidates, which can be in an

assessment center and include the testing of certain knowledge or skills.
Testing is optional, however, and depends on the position;

– interviewing the candidates (and giving them feedback on the tests)

and allowing the candidates to ask the selectors questions they would like
answered about the job;

– choosing the candidate who has been successful;

– ensuring references are checked (this is sometimes done before the
interview) but must be done at some stage;

– offering the position, confirming in writing and receiving acceptance

from the chosen candidate;

– organizing the induction process; and

– evaluating the result usually after a certain period of time.

Obtaining References

Ensure references are obtained before offering the position.

Offering the position

Once references have been carefully checked, then the company can offer
employment to the successful candidate. This must be confirmed in
writing. In certain cases, however, it may be better to inform the
candidate as soon as possible, especially if you aware that they are
applying for other positions. Then a telephone call with the main details
usually takes place first. Should the candidate wish to negotiate any of
the details, then this call allows such negotiations to proceed quickly.

The offer of employment should contain the following details:

– Job Title

– Starting Date

– Starting salary and any agreed details on salary progression and how it
is determined, especially during the first year.

– Any help with re-location if appropriate.

– Company car, level, and arrangements for petrol, if appropriate. This is
for executive positions.

– Details of confirmation of the offer (the candidate is usually asked to

sign their agreement on one copy of the letter and return it to the
company.

– Details may also be supplied of other company benefits if appropriate.

These can include healthcare and life insurance, staff discounts, parking
arrangements, and pension schemes. When the candidate accepts the
company’s offer of employment a formal ‘contract of employment’ needs
to be given to the employee approximately two weeks before they start
work. Unsuccessful candidates are informed by letter. However, the
candidate who is ‘first reserve’ should also be telephoned to be told of the
decision. They will be informed that they are waiting for confirmation but,
if the chosen candidate declines, they will be offered the position. This is
more than just a courtesy as it keeps this candidate interested and
positive towards the organization.

Employee Onboarding Process:

HR Managers face numerous challenges on a day-to-day basis, but none

more intense than recruitment and employee onboarding. The demand is
insatiable, but the talent pool continues to shrink steadily. Succeeding in
the quest to find the right candidate despite the talent crunch has become
more important than ever. But after finding the right person, an even larger
challenge begins.

After devoting endless hours searching for, identifying, interviewing, and

recruiting the right talent, if the new hire ends up quitting for a greener
landscape, all your hard work will go down the drain, and you are back to
step one. Or, what if a candidate accepts an offer, confirms the notice
period, agrees to a date of joining, but backs out at the last minute.

Can a more structured employee onboarding implemented using a defined

employee onboarding process really prevent something like this? Would it
really increase employee engagement, invoke a sense of loyalty in new
hires and in turn, improve employee retention rate.

Onboarding in HR

"Onboarding" refers to the organized set of procedures designed to

integrate new hires into an organization, involving tasks like attending an
introductory orientation, familiarizing themselves with the company's
hierarchy and culture, and grasping its goals and principles.

employee onboarding

The definition of employee onboarding differs from one organization to

another. While the process tends to be almost similar, the time-period and
tasks involved make each onboarding program unique.

While a few HR managers seem to consider employee onboarding process

as simply the new hire paperwork, more savvy and committed team
members have a different perspective on the employee onboarding
meaning. They consider the entire period from the time an offer is released
to the moment where an employee becomes a productive contributor to the
organization as a part of employee onboarding.

Onboarding spans from the minute you make an offer to the time the
employee starts genuinely producing in a role. However, the time taken to
achieve that might vary from one organization to another. A few
organizations consider onboarding a one-day affair whereas others stretch
it out for 18 months. However, for nearly all organizations, the employee
onboarding process starts right after the offer letter is sent to a prospective
employee.

Every process that falls within that time period including the orientation
program, the training plan, setting up performance metrics and a feedback
loop is segmented under the definition of onboarding.

employee onboarding workflow

An employee onboarding workflow is a set of pre-defined steps that

introduce the new employee to the organization's environment and culture.
A seamless onboarding process is essential for organizations to engage
early with their employees and give them a smooth onboarding experience.
The onboarding process involves various activities such as new hire
orientation, training, socialization, etc.

Employee Onboarding Template

Employee onboarding is the first interaction an employee has with the

organization right after the lengthy interview process.

 If the experience fails to live up to expectations, then your employee

might regret their decision to accept the job offer.
 The negative impression left by a poor onboarding process might
affect their perceptions, give them prejudiced notions about the
organization, and ultimately cause them to quit early.
 A solid employee onboarding process is necessary to help your new
hires settle down in their jobs, get to know the organization, obtain
clarity on their job objectives, and forge a good relationship with
other employees.
 A memorable onboarding experience not only makes employees feel
welcome but also helps them gel with the existing organizational
family faster.
  HR managers are burdened with enough as it is. Just the thought of
tackling the humongous amount of paperwork involved in the
onboarding process is enough to induce nightmares.

So, streamlining employee the onboarding process not only impresses new
employees but also reduces the workload of the HR team.

Benefits of using an employee onboarding automation

To avoid last-minute confusions and compliance issues, you need to have a

solid employee onboarding process.

Here’s what an efficient a employee onboarding software does:

 Gives you a clearly outlined onboarding template

 Minimizes the chaos made by paperwork
 Shortens the employee onboarding lifecycle
 Reduces manual intervention and human errors
 Lessens the workload of the HR team
 Provides a consistent experience to all new hires
 Injects transparency into the process flow
 Offers the employees a memorable onboarding experience

Here’s a guide you can check out for effective onboarding solution

A good employee onboarding process flow

 Figure 1TECHIN IT
PROCESS PVT.LTD.,

1. Releasing the offer

Employee onboarding process starts right after the recruitment phase. Once
an employee is selected, an HR manager sends a warm welcome email with
a few essential documents like the offer letter, links to fill out
digital onboarding forms, and policy documents. Keeping the approach
transparent familiarizes the employee with the organization’s culture and
lets them know what to expect.

2. Offer acceptance

Once the employee accepts the offer, the best organizations will schedule a
quick call to review the forms, benefits, policies, and set expectations.
Keeping the new hires engaged will affirm their choice to accept the offer,
and forge strong emotional ties with the organization. This is the right time
to start sketching the agenda for employee orientation.
3. Waiting period

Just because an employee accepted the offer doesn’t promise that they’ll
turn up for the date of joining. During the waiting period, the employee
might be open to offers from other potential employers as well. So, it is
critical to build a good rapport with the employee. Let the employee know
they’re valued. It’s a good idea to also plan the waiting period when you’re
designing your employee onboarding process

4. The day of joining

On the first day, most new hires have mixed emotions. They feel anxious,
happy, excited, and nervous at the same time. So, the primary duty of HR
managers is to ensure that the new hires feel welcome and comfortable.
Invoking a sense of belonging in new hires will make them feel more
committed and focus better on their work.

Having a handy employee onboarding checklist will relieve the stress of HR

staff. Here are a few things to do before the day of joining:

 Keep the orientation schedule ready

 Assign IT assets (workstation, email access, etc.)
 Obtain necessary office supplies (furniture, keys, access card, etc.)
 Set up a salary account
 Assign a mentor or go-to-person who can help the employee settle
down.

5.Coordinating with other departments

It is essential to coordinate with key stakeholders (co-workers and

managers) and notify them of the start date of the new hire. HR staff may
enlist the help of other employees to decorate the new employee’s cubicle,
organize one-on-one welcome meetings, and schedule an orientation
session.

6. Training and orientation

Orientation sessions give the new hire an overview of the organization’s

culture and an insight into company goals. This phase offers new hires
relevant information about the teams within the company, team processes,
and company policies. This is the right time to set role-based goals and
objectives for the next 30/ 60/ 90 days to show the new hires what they
need to focus on.

Since a major portion of employees require some essential training to get

started, most organizations schedule the training program to bring their
employees up to speed quickly. Doing an assessment of skills will help them
employers gauge the new hires knowledge and ability and develop a
personalized role-specific training plan in-tune with their skill set.

7. The first quarter

The major objective of this period is to review the expectations of the

organizations and the employee and ensure they match. This phase needs
to be filled with active dialogues about the progress and continued efforts of
the new hire in becoming an integral part of the organization.

Here is an employee onboarding checklist list of to-do tasks that HR staff

and the managers need to do for retaining the new hires long:

 Discuss the employee’s experience and check if it matches their

expectations
 Review their performance and offer feedback
 Check whether the employee has any concerns or issues
 Talk about career planning and progression
 Retrieve feedback about onboarding and any suggestions
  Identify if they need any additional training

Reinventing employee onboarding through automation

No matter how big the company, HR leaders tend to have too much on their
plates. They spend enough time scavenging for the right resources, and by
the time the onboarding starts, they are downright exhausted. Rather than
adding to their fatigue by forcing them to do things the old fashioned way,
automating the process can reduce their workload by a considerable
amount.

Using HR workflow automation software, you can ditch the onboarding

checklist and forms and eliminate manual dependency in the employee
onboarding process. With automated employee workflow, the complex
approval process can be simplified and streamlined. Also, the workflow
would be mostly transparent, so retrieving information about the status or
pinpointing the troubles would be a breeze.

With an automated onboarding app at work, you don’t have to chase after
new hires and managers to complete the tasks assigned to them. The
system takes care of it. Automatic notifications are sent to the right people
who cause a delay in the workflow. The only time you have to intervene is
when the system hits a roadblock.

In order to automate the workflow, you don’t have to invest a huge sum in
an HR Management Software or depend on the IT team to develop
sophisticated software. A simple workflow tool can automate the entire
employee onboarding process end-to-end. Even HR staff with little to no
technology exposure can create an automated workflow from scratch using
the drag-and-drop interface or customize one of the predefined onboarding
templates to suit their needs.
Steps for employee resignation

Once an employee has resigned (and once you have reacted

appropriately), you should follow your company’s standard resignation
procedures. For most businesses, the employee exit process checklist
should include the following steps.

1. Ask for a resignation letter

You need a resignation in writing so you can add it to the employee’s

personnel file. The resignation letter documents that the employee
initiated the termination and that it was not because of any disciplinary
action. Typically the resignation letter includes the employee’s intent to
leave, the intent to give two weeks’ notice, and the employee’s last day.

It is not required that an employee give two weeks’ notice even if it is

stated as a resignation policy in the employee handbook. There are no
state or federal laws that dictate that an employee can’t leave without
submitting two weeks’ notice. However, it is nice to have a commitment
from the employee to help with the transition period.

2. Work with the employee’s manager to fill the position

Any time an employee resigns, it can cause a disruption in the

department’s normal workflow. Communicate with managers to determine
what kind of impact the departure will have on the team. Will the
employee need to be replaced immediately! Can the work be divided
among the remaining employees! Can your team work effectively without
replacing the employee! Should you plan on recruiting a new employee
right away!

Also, determine whether the departing employee needs to honor the two-
week notice commitment. If the employee’s presence will have a negative
impact on morale, then you may want to recommend an earlier departure
with the assurance that they will still be paid for the remaining two
weeks. If the employee is the single source of knowledge for that
particular role, then you will probably need to keep the employee around
as long as possible to transfer knowledge, document procedures, and
teach remaining employees how to complete specific tasks.

It’s possible that your company has a resignation policy that requires that
the employee leaves immediately after the resignation is announced.
Even if the employee is valuable, is highly regarded, and would be a great
asset in the transition period, you will still need to follow the company’s
policy to avoid any possible discrimination charges.

3. Work with IT

The IT professionals in your organization have the important job of

keeping the company secure. When an employee resigns, you need to
communicate with the IT department so they can plan for the appropriate
time to disable passwords, remove accounts, collect company assets
(laptops, cell phones, thumb drives), and provision equipment for the
replacement employee.

Creating your employee resignation checklist

If you don’t have a standard resignation process in place, start with a

breakdown of responsibilities for everybody involved in the transition.

The HR representative is not the only person who will interact with the
employee. Your process should include the responsibilities of the
employee who is leaving, the employee’s manager, IT professionals, and
anybody else who may be involved in the resignation process.

Use the work breakdown as a high-level outline of what needs to be done.

From there you can create more detailed workflows for all parties
involved.

For example, your high-level breakdown could include:

 Tasks for the employee

o Submit resignation letter.
o Transfer knowledge to other team members.
o Finish up current projects.
o Remove personal items.
 Tasks for the employee’s manager
o Inform HR that the employee is resigning.
 o Make plans for the employee to finalize or transition
projects.
o Distribute employee’s work and responsibilities to current
employees until a replacement can be found.
o Request open headcount to replace the departing
employee.
 Tasks for the HR representative
o Communicate and tie up loose ends.
o Work with manager to determine when or if the employee
will be replaced.
o Schedule and complete an exit interview.
 Tasks for the IT professional
o Disable passwords.
o Delete accounts.
o Collect company-owned assets.
o Reimage computers and other devices to get ready for the
replacement employee.

After you have created a high-level outline or work breakdown, document

the details so that everybody who is involved in the employee exit
process knows what to do and when to do it.

Definition of the Employee exit process

The term offboarding in the field of human resources refers to the process
of someone leaving the organization. The process can be voluntary or
involuntary. The term is usually used when a human resource exits a
company.

Employee offboarding is an important part of the HR professional’s duty.

The employee offboarding process should be handled with grace and
sensitivity. This is the last interaction that an employee has with the
company, therefore, it is important for the employee to feel valued during
the process. It is also the last chance for the company to retain the
employee which puts the HR professional in a very interesting position.
Importance of An Employee Exit Checklist

Companies often face the request of wilful resignation or are bound to the
forceful sacking of employees. The reasons that trigger them are
different. However, HR has to maintain the retention rate of the company
lest the recruitment budgets would exceed. In the case of layoffs or
sacking, it is somehow a bitter-sweet process of letting people go.

The reasons could be a company not performing well is asking people to

leave or an employee not performing and also asked to leave. The
circumstances that follow are not cordial to all. There might be a hint of
vengeance or anger or the disillusionment of an unfair practice. All this
could boomerang if the employee offboarding checklist process is
incorrect.

Preparing the “Employee Exit Process” Checklist is a very detailed process

and should not be overlooked in the context of the after-effects. Different
positions are subject to varying levels of the offboarding process.
However, let us understand the uniform process and the details of the
employee offboarding checklist.

Steps to Employee Exit Process Checklist

1. Communication
First and foremost, If the resigning employee communicates to his senior
about his decided resignation. The senior person not only tries to talk
about the resignation but also tries to retain the employee.

However, if the employee has made up their mind to leave, he/she has to
further communicate about the resignation to the HR Department. The HR
department must set a meeting to discuss the decision with the employee
and their senior.
This gives the employee the space to discuss their problems and present
their wants. Giving the company a chance to retain them. After that, if
the employee would still like to go ahead with the further process they
submit their resignation in writing to the HR department.

The HR department then communicates the same with the employee’s

team and necessary departments. Setting things in motion for a smooth
transfer of work. Furthermore, the HR department then shares the
employee’s exit date with the manager.

2. Documentation / Paperwork

The HR department then takes the process further and focuses on the
documentation of the employee. This is one of the most important steps
of the process and if done correctly, will save a lot of time in the future.
Managing and documenting the leaving employee’s letter, offer letter,
details and benefits is extremely important. The department should have
the employee’s resignation letter before taking steps forward.
Furthermore, this is the right time to check whether their documents are
in order. If they aren’t it is possible that there won’t be a time in the
future to be able to fill those details in. Which can be extremely
troublesome in the future.

Few things that the HR department should check before the

employee’s last day in the office are :

1. Their signed resignation letter or acknowledgment of the termination

letter.
2. Their Non-Disclosure Agreement along with all relevant forms for the
company’s security.
3. The employee benefits that will continue
4. Whether the employee has any salary or conveys due.
5. A final pay-check is prepared, which includes the documentation.
6. The HR drafts the employee’s Testimonial or popularly known as
Experience letter
7. After all, the employee’s confirmation of receiving the Experience
letter.

3. Knowledge Transfer
In case the employee’s replacement has been recruited before their
leaving date then the leaving employee can share their knowledge with
the new employee. The company will definitely benefit from scheduling a
meeting between the two employees. The leaving employee can share
their expertise with the new hire and show them some critical aspects of
the role. This can even give them a clear expectation of the new role.
Furthermore, they might pick up insights that cannot be covered in a
standard training program.

Job Handover Checklist

The creation of a job handover cannot be done in a single day. Therefore,
it is the duty of the HR department to help the exiting employee make a
thorough job handover document. It should be a thorough document and
that also helps the new employee to take over the role and the
responsibilities. Also Provide the new employee with all the necessary
information regarding their role is extremely important.
Ensure that the exiting employee documents the tasks and divides them
with heading and subheadings. This will help the new employee keep
track of the tasks easier. Furthermore, mention the important details that
the employee will require to fulfil their tasks. Give them a brief
background about the clients and their expectations.
Furthermore, mention the ongoing tasks along with the priority tasks
under a different heading. This will give the employee an idea about
where they should start.

1. Contacts
1. Clients
2. Vendor
3. Support employees
4. Important Email IDs

2. General
1. Daily duties
2. Weekly duties
3. Monthly duties
4. Protocols
5. Roles
6. Supervisor to report to
7. Process flows

3. Documents
1. Important documents
2. Checklists
3. Client presentations as well as background information
4. Details
5. Department documents
6. Logbooks
7. Link to important documents

4. Recover Company Assets

When an employee leaves an organization it is the HR department’s
responsibility to confirm that all the company assets have been recovered
from the employee before their leaving date. This could include company
laptops, computers, uniforms, keys, or more. The reporting authority
must also reclaim company files, folders, swipe cards, ID cards, and other
inventory of supplies.

If there are complications with the recovery of assets the HR department

can also offer a buy-in option to the employee.

5. Update IT permissions and access

The HR department must work with the IT department to ensure that the
employee’s employee login, access to their PC and other information is no
longer available to them. It is also a common practice to redirect their
emails or add an “out of office” message to it for a short duration of time.

Furthermore, sensitive credentials that are known to the employee should

be changed and their entrance access should be revoked. If the employee
handles clients then the HR department must also decide whether the
clients should be informed about the same or not. These are very
important tasks to ensure the security of the company.

6. Full and final settlement:

Full and final settlement, otherwise known as FnF Settlement, is a
procedure of calculating several dues that have to be paid to an employee
who has either resigned, retired, or been terminated from the
organization. It covers the calculations of the last working day and
includes the additional earnings or deductions.

The new labor law for FnF payments states that the company must pay
the complete salary settlement within two days after the employee has
completed their last working day, backing their dismissal, resignation, or
termination. However, there isn’t a formulated date for the full and final
payment settlement directed in the act. Usually, 30-45 days is ideal to
pay the total and absolute compensation.

7. Settling Salary Negotiations:

If according to you, the employee is worth all that dignitary and you want
to go that extra mile, then you must know what going to be the following
steps to retain him. For example, if you introduce them to a hike or a
promotion, they will surely think about the next prospect. But if the
employee has already made their emotion, then the best you can do is
support their decision.

8. Exit Interview
The exit interview is an essential part of the employee offboarding
checklist. Also, It is necessary to conduct an Exit Interview as a part of
the employee off-boarding process. An exit interview is the last
communication link with the employee when he/she is still part of the
organization. Again, HR can try to understand why and what of the
employee’s situation is, checking any final chances of retaining the
employee.

A member of the HR department tries to understand the true reason for

their departure. It is also the final chance of retaining the employee. A
good company understands that taking feedback from a leaving employee
is important. Furthermore, it is important to work on those areas to
produce better results.

It is important to hear what the exiting employee has to say. Not only are
employees the most honest in their exit interviews but they also can give
you valuable insight into your company.

Exit Interview is conducted to explore the following parameters:

1. Check the very reason for resignation.
2. Adherence to all compliances.
3. Gain insights into improving the company culture.
4. Identify problem areas as well as work on them to improve retention.
5. Also, manage turnover cost by trying to retain the employee

Senior Management Employee Offboarding Checklist:

In case of Senior Management employees, the Employee Offboarding

Checklist is different and entails a more planned approach.

1. Senior management on-boarding and off-boarding mostly happen in

closed rooms. The idea of rudderless management might shake the
company’s market situation as well as bring insecurities in the employees.
Therefore, until the company is identifying a successor, the news is
retained in a closed circuit.

2. Some companies have already identified successors, but need to

groom them on the job and also, it should be communicated to the
resigning employee to handhold the successor to fit in the block and avoid
the interim gap.

3. Companies that have not identified a successor should, not only, bring
succession planning as a healthy and default process in the organization
but also ensure a gap-free off-boarding operation.

4. Senior Management resignations need informing various channels such

as head office, associates, vendors & shareholders.

5. Also, Publishing the Senior Management resignation in Print Medium

(Newspaper) still public notice is a mandatory process.
6. Cross-teams, the management employee, is working in although
should be kept in the loop to ascertain the legal and obliging paperwork
and permissions thereof.

7. Senior Management employee exit process not only be carried out by

experienced hands but also the image they would spread of the company
could build or shatter.

Employee Offboarding Checklist

1. What if a resigning employee is convinced and wants to retain back?

2. What is the process when an onsite employee wants to resign?
3. Draft the details incorporated in a Non-Disclosure Agreement.
4. Who will be training the replacement for the employee?
5. What if the employee wants to leave before the set notice period?
6. Also, check the list of documentation the employee should hand over
before full and final settlement.

Risk of Wrong Employee Offboarding Checklist:

Wrong offboarding can trigger a catastrophe; the company might not be

able to deal with. Therefore, having an employee exit process helps
streamline the process and excellent execution.

a. If a resigning employee does not settle with the exit process over finer
nuances, discrepancies, unsettled claims, unbiased approach or other
factors, he/she can go and spread the wrong word in his/her networking
circles which can further impact the company’s image.

b. If processor payments stretch beyond timelines, the employee might

lose out on the next opportunity. Some companies hold on to the
resignation letter and experience letter, which is a mandatory document
provided that to the next company the employee, is joining. This delay
could deliberately jeopardize the employee’s chance of retaining the new
job.

c. Resigning employees have either got a better opportunity or leaving

the organization due to culture clash or office politics, and this all comes
out at the exit interview. There is a high chance this employee might not
review the company in good books on social platforms or in his immediate
industry circles.

d. Also, Consider data leaks of critical information as the biggest jeopardy

an unsatisfied employee can do after leaving the company.

1. Company Policy of Rehire

Some companies have a policy of rehiring. Though, bringing back an
employee who has left you at one point in time is an apprehensive task.
However, maintaining records of an ex-employee on performance, the
reason for leaving, and other vital parameters can help decide if the
company should rehire an employee.

2. Maintaining the bridges

It is imperative to remember that a resigning employee is just moving out
of the organization and its influence, yet remains to be the same person.
However, HR should not only maintain the employee in the database as
an ex-employee but also keep in touch with records.

3. The circle effect

Recruitment, as well as resignation, are a circle effect and inherently part
of any organization. Additionally, a transparent process and
documentation ensure an enhanced experience, be it recruitment or
resignation.
. 4.The interim head
Some employees do not even serve the notice period for fear of losing the
next lucrative job because of immediate joining. So, that manager and
above positions, an interim responsibility and reporting head be shall
depute to fill in the gaps.

5. Handling Critical Offboarding Scenarios

When a company sacks an employee, it could be for various reasons, not
only productivity. After all, we are dealing with employees who are
humans. Companies terminate employees on immediate notice due to
various reasons like – failing to comply with company laws, involvement
in a legal matter that tarnishes the company’s image, unethical practices,
sexual harassment, fraud, and physical harm to fellow employees.
A sacked employee might also get into a legal battle with a client for
unfair termination.

The Employee Offboarding Checklist should incorporate particular

documents for the above unforeseen and exceptional cases. Legal
guidance provided that acting guideline helps aid and ease such a
process.

Employee Offboarding Checklist Should Also Include the Following

Documentation:

1. PF & ESIC transfer.

2. PF & ESIC are the valued possessions of an employee that are
transferrable from one organization to another. Also, HR ensures that this
transfer is a smooth process for the employees.
3. The company should share transfer or offloading options, in case of
employee loans if any.
4. Also, Medical claims shall settle off.
 5. Pending incentives and bonuses if any, should be effected under
relevant documentation and cleared off.

Let the exiting employee nurture the excellent time spent with your
organization. In addition, a farewell is the least any company can give to
its exiting employee. More prominent companies, as a policy,
acknowledge the length of an employee service by giving placards and
mementos in the company award functions.
Finally, out of the company, systems, and processes, a gift of good
memories and experience is all an employee can retain.

PAYROLL

The term ‘Payroll’ is associated with several meanings and is interchangeably used
as an umbrella term for:

 A group of people employed by an organization depicting their earnings

 The total number of employees working with a company or an economy
 The amount of money paid to the people employed by a particular company
 The complete chain of tasks for managing the money paid to the employees

With that being said about the subject, the most widely accepted payroll meaning
is the 4th one, i.e., Payroll is an operation that includes a gamut of tasks starting
from onboarding a new join on payroll, establishing payroll policies, defining pay
components, gathering inputs, calculating and verifying payout, processing salary,
distributing payslips, tax-filing, accounting, and reporting.

Payroll Selection

Before you adopt a new payroll solution or service, it is extremely crucial to

consider some primitive factors while choosing the same.

First of all, there are 3 types of payroll services:

 Online: This is the easiest and the most common way to manage payroll
nowadays. You simply have to choose an online payroll software that suits your
 company needs and user preferences. Get a stable internet connection and avail
online payroll services as per your budget. In a few clicks and the salary is auto-
processed into your employees’ accounts.
 In-house: This is when you decide to purchase a payroll software of your own and
integrate it with your existing HR management system. In this case, there is no
need to raise requests for rectifying errors or making changes to the process. You
can simply hire experts to operate the software and get things done in the
workplace.
 Outsourced: Now comes the most liked option of processing and managing payroll
– Outsourcing! It is cost-effective as you don’t need to hire experts or use your
resources to perform the functions. You just have to finalize the budget and hand
over all your payroll responsibilities to a third-party payroll service provider.

Payroll Management Process

The payroll management process is nothing but a set of regulated steps that are
performed in the same order every month to form a payroll cycle. In other words,
the payroll process is all about arriving at what is due to the employees, i.e., the
Net Pay after making the necessary tax adjustments and other deductions.
The stages of payroll process include:

 Pre-payroll process
 Actual payroll process
 Post-payroll process

Provident Fund (PF)

Employee Provident Fund, popularly known as PF is the retirement saving scheme

available to all the salaried employees, is backed by the government on which
fixed interest is paid.

The employee provident fund is administered by the Employees Provident Fund

Organization (EPFO), a statutory body developed by the government of India
under the Ministry of Labor and Employment. It is formed to administer the
mandatory contribution towards the PF scheme by both the employees and
employers.

E Filing Provident Fund

Monthly PF Returns

· Electronic Challan cum Return, also called as ECR is an electronic monthly return
to be filed by employers through the Employer EPF portal.

· The return is to contain member wise details of salaries (or wages) and
contributions.
 · It should also include basic details of new and existing members

· Meaning, relevant information relating to members who have joined or have left
service in the wage period for which the return is uploaded.

· The approval of uploaded ECR will result in the generation of a Challan.

· The employer has to remit the dues through online payment using the above
Challan.

· This relieves the employer from filing hard copies of returns and also various
other monthly and annual returns under The Provident Fund scheme.

In order to generate monthly EPF challans, employers need to upload text files in
the EPF portal. The unified PF portal accepts only text files. So, the employers
have to convert PF excel file formats into text files first and then upload them into
PF portal.

UNIVERSAL ACCOUNT NUMBER (UAN)

The Universal Account Number is a 12-digit number issued by the Ministry of

Labour and Employment to any member of the Employees’ Provident Fund
Organization (EPFO), allowing them to manage PF accounts from a single place.

Before 2014, every new company used to assign a new PF account number. This
made it difficult to estimate the PF balance accurately. Moreover, it wasn’t easy to
keep track of past transactions. As a solution to this issue, it was introduced.

It is a single, unique identification number for all the employees of an organization.

It allows employees to consolidate all their Provident Fund accounts associated
with different employee IDs from various organizations in one place. This makes it
easier for them to withdraw or transfer funds. Any employee in an organization
that offers the Employees’ Provident Fund and Family Pension Scheme must fill
out Form-11.

BENEFITS OF UAN

Universal Account Number offers the following benefits:

1. This platform integrates all your PF account details and allows you to complete
your KYC process.
2. The Universal Account Number makes it easy for employers to verify the
employment history of job applicants.
3. Activating your UAN number is simple and requires only the necessary bank details.
4. The unique PF number allows you to transfer or withdraw money from your
account anytime.
5. You can manage your PF account by logging into the UAN online portal.
6. The employer can verify and validate your PF request on the portal. The employer
can also successfully submit the PF contribution by using this portal.
7. Employees can only access their UAN account as it is linked to their KYC details.
8. The government or an agency assigns you this number, and it remains with you no
matter which employer you have.
9. Under the Universal Account Number initiative, you can check your employee
provident fund account balance, status, claims, and a lot more, i.e., manage your
complete EPF account online.
10. The work contract will include a tax identification number that can be
used to track the amount being credited by the employer every month and to keep
tabs on deductions and accrued interest.

National Pension Scheme (NPS)

The National Pension Scheme is a social security initiative by the Central

Government. This pension programme is open to employees from the public,
private and even the unorganised sectors except those from the armed forces.

The scheme encourages people to invest in a pension account at regular intervals

during the course of their employment. After retirement, the subscribers can take
out a certain percentage of the corpus. As an NPS account holder, you will receive
the remaining amount as a monthly pension post your retirement.

Earlier, the NPS scheme covered only Central Government employees. Central
Government employees joining on or after 01-01- 2004 are mandatorily covered
under the NPS. Now, however, the PFRDA has made it open to all Indian citizens
on a voluntary basis.

The NPS scheme holds immense value for anyone who works in the private sector
and requires a regular pension after retirement. The scheme is portable across
jobs and locations, with tax benefits under Section 80C and Section 80CCD.

National Pension Scheme Benefits

Employee tax benefits for self-contribution:

Employees who contribute to NPS are eligible for the following tax breaks on their
contributions:

a) Tax deduction of up to 10% of pay (Basic + DA) under Section 80 CCD(1),

subject to a maximum of Rs.1.50 lakh under Section 80CCE.

b) A tax deduction of up to Rs. 50,000 under Section 80 CCD(1B) in addition to the

overall limit of Rs.1.50 lakh under Section 80CCE.

Employee tax benefits on employer contributions:

Eligible for a tax deduction of up to 10% of salary (Basic + DA) (14% if such
contribution is made by the Central Government) supplied by the employer under
Section 80 CCD(2) beyond the Rs.1.50 lakh limit provided by Section 80CCE.

Tax benefits for self-employed people:

Self-employed individuals who contribute to NPS are eligible for the following tax
breaks on their own contributions:

a) Tax deduction of up to 20% of gross income under Section 80 CCD (1), subject
to a total limit of Rs.1.50 lakh under Section 80CCE.

b) A tax deduction of up to Rs.50,000 under Section 80 CCD(1B) in addition to the

overall limit of Rs.1.50 lakh under Section 80CCE.

Tax advantages of partial withdrawal from an NPS account:

Qualified for tax exemption on amounts withdrawn up to 25% of self-contribution,

subject to the criteria and circumstances prescribed by PFRDA under section
10(12B).

Tax benefit on Annuity purchase:

Qualified for a tax exemption on the purchase of an annuity or superannuation at

the age of 60 under Section 80CCD (5). But, the subsequent income from an
annuity is taxed under Section 80CCD (3).

Tax advantages of a lump sum withdrawal:

Section 10 allows for a tax exemption on a lump sum withdrawal of 60% of

accrued pension funds upon reaching the age of 60 or superannuation (12A).

Corporate/employer tax breaks:

Eligible for a tax deduction on the amount contributed as an employer contribution

to an employee's NPS account, up to 10% of the employee's pay (Basic + DA) of
the employer's contribution as a 'Business Cost' from the Profit & Loss Account
under section 36(1)(iv)(a).

Employees’ State Insurance (ESI)

Employees' State Insurance Corporation (ESIC) is a government organization that

manages the Employees' State Insurance (ESI) scheme. The scheme basically
provides medical and financial assistance to the employees and their families. The
assistance is provided when an employee is unable to perform his duties due to
sickness, employment injury, or maternity.
ESI is a social security scheme offered by the Government of India as per the
Employees' State Insurance Act, 1948. The scheme provides protection to
employees against disablement/death due to employment injury, sickness, and
maternity. Employees must be subscribed for the scheme to get the medical care
and other benefits. The financial assistance provided by the scheme may replace
the employees' loss of salary due to the health conditions.

This is a self-financing scheme, where the employees and the employers make
regular monthly contributions to the scheme at a certain percentage of their
wages.

ESI-ELECTRONIC RETURN FORMAT

ESI Payment or ESI Challan

Unlike the regular payment process, you have first to generate ESI challans to be
able to make monthly contributions. To generate monthly ESI challenges,
employers need to upload excel files in the format specified as per ESI norms.

Structure of ESI Excel format

IP Number

The Insured Person’s (IP) 10 digit identification number allotted by the ESI
department is needed first.

IP Name

Next, enter Name as per ESI records. Characters of only alphabets and space are
to be entered in this field.

Excel sheet upload will lead to the successful transaction only when all of the
Employees’ details (who are currently mapped in the system) are entered correctly
in the excel sheet.

Date field

The number of days for which wages are being paid or payable during the month
to be specified. The number of days must be a whole number.

Fractions should be rounded up to next higher whole number or integer.

Reason Code

If the Date field has been entered as ‘0’, the reason for the same has to be
specified in this field. Reasons are to be assigned numeric code only as per the
table given below.
Labour Welfare Fund (LWF)

Labour Welfare Funds are set up under the Labour Welfare Act to provide benefits
and assistance to workers and labourers. These facilities help improve workers'
working conditions, assisting in their upliftment and raising their standard of living.

The Board (LWF) may utilize the funds for:

· Providing transportation facilities to workers for commuting to work

· Education of the children of the workers

· Nutritious food for their children

· Subsidiary occupations for women and unemployed persons

· Vocational training

· Encouraging and assistance for participation in sporting events and competitions

· Offering loans to industrial workers for the construction of houses at discounted

rates

. Scholarship for children of workers

· Setting up reading rooms and libraries

· Medical facilities to employers in public and private sectors with a motive to

encourage them to extend the same to their respective employees and families

· Encourage entertainment and recreational activities like sports, music, etc. to

create a healthy work environment among the employees

· Provision for excursions, tours and holiday homes

Do all employers and employees (workers) come under the purview of the
Act?

The applicability differs based on state-specific rules. Respective State Legislations

prescribe these parameters.

The implementation of this Act to establishments depends on:

· Total number of employees

· The wages earned and

· The designation of the employee

 The Labour Welfare Act is currently active in 16 States (including Union Territories)
in India.

Contribution

The employer and employee make contributions to the fund. In some states, the
Government contributes as well. Separate (State) Labour Welfare Fund Act and
(State) Labour Welfare Fund Rules are framed for different States & Union
Territories. Thereby, the rates of contributions differ.

Remittance of Contributions

The State Labour Welfare Board decides the amount of contribution and the
frequency of the contribution. The contribution to the Labour Welfare Fund may
occur annually, half-yearly or monthly. Some states such as Andhra Pradesh, Goa,
Karnataka and Tamil Nadu have an annual contribution. In contrast, some states
such as Madhya Pradesh, Maharashtra and Gujarat have contributions during June
and December. Establishments in Kerala have to follow monthly or half-yearly
contributions depending on the Act applicable to them.

Below is a summary showing the States and Union Territories that have adopted
the law, the periodicity of contribution, and the dates on which contributions must
be deducted and remitted.

Gratuity

Gratuity is a voluntary payment made by an employer in appreciation of services

rendered by the employee.

The Payment of Gratuity Act, 1972 is a statutory recognition of the concept of

Gratuity. Meaning, provisions relating to the payment of Gratuity are contained in
this act. It forms the governing document.

Calculation of Gratuity

The calculation of Gratuity is based on two factors:

 Years of service rendered in the organization

 Employees last drawn salary

The calculation also differs for:

 Employees covered under the act

 Employees not covered under the act

Forfeiture of Gratuity
 Employers can forfeit to pay Gratuity payable of an employee who has been
terminated for the following reasons –

 Committing an offence involving moral turpitude

 Riotous or disorderly conduct or any other violent act
 Where the termination was for a fault on the part of the employee

Professional Tax (PT)

Professional Tax

Neither the Constitution nor the Act on Professions, Trades, Callings and
Employments Act enacted in 1976 or 1987 defines the expressions' profession',
'trades', 'callings' or 'employments'. The dictionary meaning of the word
'Profession' is a calling or employment, occupation to which one devotes himself to
the business which one professes for sustenance. The word calling means
occupation, profession & trade. Thus all the words employed 'Profession', 'Trade',
'Calling' & 'Employment' carries the same meaning. They appear to have been
used as a measure of abundant caution to ensure that no particular category of
persons gets excluded from the levy. However, Article 276 of the Constitution also
provides for a maximum limit of Rs.2,500, beyond which no State can charge the
said Professional Tax.

subject to Professional Tax

All persons earning by way of employment, carrying on a trade, business, or

profession are subject to pay Professional Tax if charged by their respective state.

In Salaried employees' case - Professional Tax is deducted by the employers

and deposited with the State Government.

For others -Persons earning the said incomes have to directly pay it to the
Government or through the Local Bodies appointed to do so.

The tax has to be collected and deposited as per the timeline provided by the
respective State Government.

In case one fails to do so, a penalty and late fee are applicable as per the
respective State Act.

Persons exempted from Professional Tax

The following individuals are exempted from payment of Professional Tax under the
Professional Tax Rules:

· Members of the Forces as defined in the Army Act 1950, the Air Force Act 1950
and the Navy Act 1957, including members of auxiliary forces, serving in the state
 · An individual suffering from a permanent physical disability (including blindness)

· Parents or Guardians of children with permanent or mental disability

· Women exclusively engaged as agents under the Mahila Pradhan Kshetriya

Bachat Yojana or Director of Small Savings

 Individuals (above 65 years)

 Badli workers in the textile industry

House Rent Allowance (HRA)

HRA or house rent allowance is a benefit provided by employers to their employees

to help the latter cover their accommodation expenses or the cost of renting a
house.

You can claim a deduction for HRA under Section 10(13A) of the Income Tax Act
but remember it can be fully or partially taxable. The calculation of HRA deduction
depends on multiple factors such as:

 Your salary
 HRA received
 Actual rent paid
 City of residence

Eligibility Criteria To Claim Tax Deduction On HRA

House rent allowance is eligible for HRA deduction under Section 10(13A) of the
Income Tax Act if an individual meets the following criteria:

 The person claiming HRA deduction is a salaried or a self-employed individual.

 The person must be living in a rented house. HRA tax calculations cannot be made
for living in your own house.
 You should be able to produce a proof for rent paid such as a valid house rent
receipt.
This means that if you do not pay rent, you cannot claim an HRA deduction even if
your employer pays you HRA as part of your salary.

HRA Calculation Formula

HRA calculations are based on a number of factors, including your salary, the HRA
you receive from your employer, the actual rent you pay, and whether you live in a
metro or a non-metro city. However, when computing the HRA tax calculation, the
amount of exemption will be the lowest of:

 The HRA your employer pays you

 Actual rent paid for accommodation minus 10% of basic pay
 50% of basic salary plus dearness allowance if you live in a metro city (Mumbai,
Delhi, Kolkata, or Chennai) or 40% of basic salary plus dearness allowance if you
live in a non-metro city
The house rent allowance calculation or HRA formula is to calculate the three
aspects above and claim the lowest as HRA deduction under Section 10(13A) of
the ITA.

HRA Taxation Rule

 HRA exemption rules state that HRA deduction is only allowed for salaried and self-
employed individuals who live in rented accommodation. This means that even if
your salary structure has an HRA section or component if you are not paying rent,
the entire amount will become taxable.
 Taking Mr. Ramanath’s example, if he did not pay rent, then the HRA of Rs. 84,000
paid to him by his employer would be taxed under his applicable income tax
bracket.
 For self-employed individuals who do not receive an HRA component, HRA rules
allow the benefit of claiming HRA exemption under Section 80GG of the ITA. This is
the route that even salaried individuals paying rent can take in case their employer
does not pay HRA.
 Therefore, while calculating HRA exemption, it is important to understand whether
you can claim the deduction under Section 10(13A) or Section 80GG of the ITA.

Tax Benefits of HRA

HRA deduction under Section 10(13A) of the ITA has the following benefits:

 The biggest advantage of the HRA rebate is that it reduces your taxable income.
 You can claim deduction on HRA in income tax filing even if you live with your
parents, as long as you produce proof of paying rent.
 You can claim HRA tax benefit even while paying EMI on a home loan as long as
the house is not located in the city of employment/ residence. In case you own a
house in the same city as employment and living, you will need to produce a valid
explanation as to why you cannot live there in order to claim the HRA exemption.

INCOM TAX AND SALARY TDS

 Income from employment is taxable under the head 'Salaries' under the
Income Tax Act,1961. The Act also provides the benefit of exemptions and
deductions, which reduce tax liability. Employees will have to inform their
employers all necessary relevant details to benefit from exemptions and
deductions, thereby lowering taxes from their salary (TDS).

Rental details

If you are in receipt of House Rent Allowance (HRA) as a component of your salary,
you have to provide the following details to avail HRA exemption under section
10(13A) of the Income Tax Act, 1961.
 · Monthly rentals to be paid

· Period of the tenancy (in months) for the current financial year

· Address of the rented accommodation

· Where the rent is in excess of Rs.1,00,000, the Permanent Account Number(PAN)

of the Landlord

· Rental vouchers or other proof of rentals paid (at year-end declarations)

Details of Home loan

Suppose you have availed residential or home loans in connection with the
acquisition (purchase) or construction of a house meant for self-occupation. In that
case, you have to provide the following details to to avail deduction in respect of
Loss from House Property under section 24(b) of the Income Tax Act, 1961.

 Purpose of the loan

 Amount of loan borrowed
 Date of loan
 Name of the lender

· Permanent Account Number (PAN) of the lender

· Date of completion of construction of the house

· Break up of principal and interest paid during the year

· Statement of loan and payment proofs (at year-end declarations)

Children's Education

If you are paying fee regarding your children's education, provide the following
details to avail deduction in the relation of Children Education Allowance under
section 10(14)(ii) of the Income Tax Act, 1961.

 Number of children
 Fee paid

· Payment proofs in the form of receipts or vouchers from the institution (at year-
end declarations)

Children Hostel allowance

If the children mentioned above are undergoing education in a hostel, provide the
following details to avail deduction in respect of children Hostel Allowance under
section 10(14)(ii) of the Income Tax Act, 1961.
 Number of children
 Fee paid

· Payment proofs in the form of receipts or vouchers from the institution (at year-
end declarations)

Car expenditure

Suppose you own a motor car which is used partly for official and partly for
personal purposes, and your employer reimburses expenses for the running &
maintenance of the car. In such cases, provide the following details to deduce such
expenditure as per Sub-rule (2) of Rule 3 of the Income Tax Rules.

 The engine capacity of the car

 Proof of expenses incurred in respect of (at year-end declarations)
 Fuel
 Servicing
 Overhauling and maintenance

Handicap benefit

If you are blind/deaf and dumb/ orthopedically handicapped employee and in

receipt of transport allowance from your employer, provide the following details to
avail deduction in respect of such allowance received under section 10(14)(ii) of
the Income Tax Act, 1961.

 Certificate of Disability approved from a Neurologist having a degree of Doctor of

Medicine (MD) or a Civil Surgeon or Chief Medical Officer in a Government hospital
 The certificate should mention the nature and degree of disability

80C Investments

If you have invested monies into purposes or instruments mentioned under section
80C of the Income Tax Act, 1961, provide the following details to avail deduction.

Wherever applicable- Amounts paid, policy numbers, names, date(s) of

investments, policy maturity details etc for investments into:

 Public Provident Fund (PPF)

 National Savings Certificate (NSC)
 Life Insurance premium payment
 Children's Tuition Fee (Full-time education of any two children)
 'Principal' repayment of home loan
 Investment in Sukanya Samridhi Account
 National Savings Certificate (NSC)
 Unit Linked Insurance Plans (ULIPS)
 Equity Linked Savings Scheme (ELSS)
 Sum paid to purchase Deferred Annuity
 Five-year deposit scheme (Post Office)
 Term Deposit in a Scheduled Bank (5 Years or more)
 senior citizen’s savings scheme
 Subscription to notified securities/notified deposits scheme
 Contribution to notified Annuity Plan of LIC
 Contribution to Pension Fund of LIC or other Insurance company
 Employee's contribution to a Notified Pension Scheme (National Pension Scheme;
Atal Pension Yojana)

Payment proofs in the form of receipts, vouchers or acknowledgements from the

funds, schemes or institutions (at year-end declarations)

Mediclaim policy

If you have paid Medical Insurance premiums, provide the following details to avail
deduction in respect of it under section 80D of the Income Tax Act, 1961.

· Names of self, spouse, parents, dependent children in respect of whom premiums

are paid

· Age of self, spouse, parents, dependent children in respect of whom premiums

are paid

 Policy number

· Date of commencement and expiry of Risk

· Name and details of Insurer

· Payment proofs in the form of premium receipts (at year-end declarations)

Handicapped Dependent

If you spend for the medical treatment of a Handicapped Dependent or pay

towards Specified Schemes for maintenance of Handicapped Dependent, provide
the following details to avail deduction in respect of it under section 80DD of the
Income Tax Act, 1961.

· Name of Handicapped Dependent

· Certificate of Disability approved from a Neurologist having a degree of Doctor of

Medicine (MD) in Neurology (in case of children, a Pediatric Neurologist having an
equivalent degree); or a Civil Surgeon or Chief Medical Officer in a Government
hospital

· Details of approved schemes invested in

 · Payment proofs in the form of medical bills and premium receipts (at year-end
declarations)

Interest on Education loan

If you are paying interest on loans borrowed for Higher Education, provide the
following details to avail deduction in respect of Education loan under section 80E
of the Income Tax Act, 1961.

· Name and details of self, spouse, children, any student for whom the employee is
a legal guardian, in respect of whom the loan is availed

 Date of loan

· Name and details of financial institution

· Break up of principal and interest paid during the year

· Statement of loan and payment proofs (at year-end declarations)

E-vehicle loan

If you are paying interest on loans borrowed for electric vehicles' purchase,
provide the following details to avail deduction in respect of it under section 80EEB
of the Income Tax Act, 1961.

· Date of purchase of the electric vehicle

 Date of loan

· Name and details of financial institution lending the loan

· Statement of loan and payment proofs (at year-end declarations)

Savings Bank Interest

If you have received interest from Savings Bank account above Rs. 10,000 during
the year, provide the following details.

 Details of bank account

· Amount of interest received

· Permanent Account Number (PAN)

80U Disability deduction

If you qualify to avail disability benefits mentioned under section 80U of the
Income Tax Act, 1961, provide the following details.

· Certificate of Disability approved from a Neurologist having a degree of Doctor of

Medicine (MD) in Neurology or a Civil Surgeon or Chief Medical Officer in a
Government hospital

· The certificate should mention the nature and degree of disability

TAXATION OF PROVIDENT FUND (PF)

The taxation rules for income from EPF contributions

Tax on interest credited to EPF account

After Budget 2021, interest on an employee’s contribution to an EPF account above

Rs 2.5 lakh during the financial year is taxable in the hands of the employee. This
interest is also subject to TDS.

This rule will only apply to the contributions made by the employee, while
contributions made by the employer will not be taxed. The calculation of interest on
the threshold limit of Rs 2.5 lakh shall also include VPF contributions.

For example, an employee’s basic salary (no dearness allowance) is Rs 50,000 per
month. The employer deducts 12% of the employee’s basic salary, i.e., Rs 6,000
towards EPF contribution. However, the employee voluntarily contributes Rs 3.28
lakh in VPF during the financial year. Hence, the employee’s total EPF contribution
during the financial year will be Rs 4 lakh (Rs 6,000 x 12 + Rs 3.28 lakh).

The employee will be required to pay tax on the excess contribution of Rs 1.5 lakh
[Rs 72,000(EPF) + Rs 3.28 lakh(VPF) – Rs 2.5 lakh].

In the case of govt employees who contribute to GPF, the threshold of Rs 2.5 lakh
has been raised to Rs 5 lakh. That is to say interest on GPF contribution in excess
of Rs 5 lakh will be taxable for the employee.

Before FY 2021-22, the interest credited to the EPF account on any amount of
contribution was tax-free. Now a cap of Rs 2.5 lakh has been introduced, interest
on contributions beyond this shall be taxable.

Tax deduction on contribution to EPF account

An employee’s contribution to the EPF account is allowed as a deduction up to Rs

1.5 lakh under Section 80C of the IT Act.

From FY 2020-21 onwards, the employer’s contribution to the EPF account shall
become taxable if the contribution to EPF, NPS and/or superannuation fund exceeds
Rs 7.5 lakh in a financial year. The excess contribution will become taxable. The
 employer needs to calculate the amount that will be taxed as a prerequisite, and
this will be reflected in the employee’s Form 16.

Effective date

This amendment will be applicable from 1st April 2021. It means the interest on the
employee’s EPF contributions for the FY 2021-22, and above Rs 2.5 lakh shall be
taxable.

Calculation of the taxable portion of EPF interest

As per notification No. 95/2021 dated 31st August 2021, for calculating taxable
interest, the PF department shall maintain separate accounts, one with taxable
contribution and another with non-taxable contribution, for all the subscribers
starting from the financial year 2021-22 and onwards.

The taxpayer shall be liable to pay tax on the interest accrued in the taxable
contribution account. The EPFO shall deduct TDS on such interest.

FORM 16

Employers are obligated to deduct tax from the salaries payable to employees,
where the salary exceeds the basic exemption limit prescribed by the Finance Act.
Such 'Salary TDS' is then remitted to the government by the employer. You can
avail these details on a document known as Form 16, which is a TDS Certificate.

Form 16 helps the employees know how much tax is paid on their behalf. A TDS
certificate includes salary paid, TDS deduction date, amount of TDS, and the date
it is deposited or remitted to the government. If tax has been deducted at source
from the salary paid to employees, then the employer has to issue Form 16.

However, in cases where the employee's gross annual salary is below the taxable
limits or the employee has furnished Form 15G or Form 15H, the tax deduction will
not be required. In these cases, issuance of Form 16 is not mandatory.

Components of Form 16

Form 16 is made up of two parts:

 Part A
 Part B

Form 16, Part A

 Part A of Form 16 consists of:

· Name and address of the employer

· Name and address of the employee

· Tax Deduction and Collection Account Number (TAN) and Permanent Account
Number (PAN) of employer

· Permanent Account Number (PAN) of the employee

· Summary of the amount paid or credited and tax deducted at source thereon in
respect of the employee

· Payment wise details of tax deducted & deposited quarterly, certified by the
employer

An employer can generate and download this part of Form 16 through the TRACES
portal

Before issuing the certificate, the employer should authenticate its contents.

Suppose an employee is employed under only one employer during the year, then
a certificate in Form 16 issued for the quarter ending on 31st March of the financial
year shall contain the details of tax deducted and deposited for all the financial
year's quarters.

On the other hand, if an employee is employed under more than one employer
during the year, each of the employers shall issue Part A of the certificate in Form
16 pertaining to the period for which such employee was employed.

Part B (Annexure) of the certificate in Form 16 may be issued by each of the

employers or the last employer at the option of the employee.

Form 16, Part B

Part B of Form 16 consists of:

 Detailed breakup of salary

 Detailed breakup of exempted allowances under Section 10
 Any other income reported by the employee
 Deductions allowed under Chapter VI-A
 Relief under Section 89 (if any)
 Details of tax payable, deducted and paid
 Name, designation and signature of the person responsible for deduction of tax

Due date to issue Form 16

 The employer must issue Form 16 within 15 days from the Due date for filing TDS
of the 4th quarter. If the TDS filing due date for FY 2020-2021 is 31st May 2021,
Form 16 is to be issued within 15th June 2021.

In other words, employers must issue Form 16 on or before 15th June of the next
year, immediately following the financial year in which the tax is deducted.

Penalty

If the employer does not produce a TDS certificate within the due date, then the
employer is liable to pay

· a penalty of Rs.100 per day of delay

 per certificate

However, the amount of penalty cannot exceed the TDS amount deducted for the
quarter.

Due Dates relating to Payroll in India

ESI Contribution Amount means employee’s contribution of Employee State

Insurance deducted from the employees’ salary and the employer’s contribution.
ESI Contribution amount to be deposited before 15th of the month following the
month in which deductions are made. That is, ESI contribution for the month of
April, is to be deposited on or before the 15th of May.

ATTENDANCE MANAGEMENT SYSTEM AND OTHER ITEMS IN PAYROLL

Attendance is the action or state of being present at a place of work according to

the company's policies. The opposite of attendance is absence from work.

But it is not as simple as that. In most companies, an employee has to be present

within a specific period for a certain number of hours to be considered as being
present.

For example, if an employee comes to a factory at 3:00 PM and leaves after just
one hour of work, it does not count. The employee needs to be present from the
start till the end of the shift.

However, for teams that are not customer-facing or work is not time-dependent,
attendance could mean putting in 8 hours of work per day. It could be 9 to 5 one
day and 6 to 2 on another day.

Apart from the narrow definition above, attendance can be considered a short-
hand term to cover a wide range of concerns like absenteeism, time discipline,
time accounting, workforce management, productivity, etc.
Need for Attendance Management

Tracking an employee's attendance is essential to your company's profitability,

reliability, and reputation. There are seven broad reasons why attendance
management is required:

Productivity

Time spent doing work is a crucial input variable of production involving human
workers. So, more time at work means higher productivity.

Smooth Running of Operations

It's not just the personal productivity of one employee at stake but the
productivity of the team and the overall organization. The absence of a team
member leads to coordination issues, delays, higher work-in-progress (WIP), or
inventory. But when this happens multiple times with different people, the impact
of absence multiples instead of just adding up.

Discipline

A lack of discipline in the organization leads to unpredictability, delays, and

variability of both quality and the delivery schedule. Indiscipline is also infectious.
It influences other employees also to adopt the bad habit and thus compound the
issue.

When conscientious employees notice that indiscipline is tolerated and ignored, at

first, they are frustrated and resentful. Eventually, they may leave the organization
searching for a better workplace while the employer brand suffers a big blow.

From a lean management angle, time discipline helps in reducing variability and
delays.

Overtime

Many organizations like hospitals, retail, and factories operate multiple shifts. Even
so, high production demand may require people to work overtime beyond regular
working hours or on weekends or holidays.

A proper time tracking system and accounting practice are essential both from a
cost-efficiency perspective and higher employee satisfaction. A lack of a sound
system will lead to disputes, higher employee expense, and lots of stress for the
administrators.

Time Theft

The original reason time clocks were introduced in the industrial era was to ensure
people got paid only when they were at work. Without accurate timekeeping, some
people may misuse the system and indulge in time theft through late arrival, early
out, too many coffee breaks, etc.

The only solution to time theft is to have a fool-proof system for tracking
attendance and enforcing policy consistently and diligently.

With an overtime policy, some employees tend to push work that could have been
done in regular time to overtime hours. This is just another type of time theft.
Once again, good record-keeping and tracking can go a long way in curbing
misbehavior.

Accurate Payroll Inputs

Attendance inputs are crucial to accurately calculate the salaries of employees.

Salaries are paid for the days worked and this information is ascertained from
attendance data. In addition to this, attendance data is also used to calculate Shift
Allowances, Attendance Bonus and Overtime payments.

Compliance

Attendance data is needed for various compliance reports also. These reports are
in the areas of hours worked for a day and week, Shifts worked on, Overtime
hours worked and information on days present and days when an employee is on
Leave or is absent.

In India, these reports are to be generated under various Acts like the Factories
Act, Shops & Establishment Acts, etc.

RE-IMBURSEMENT:
Reimbursement is when a business pays back an employee, client, or other people
for money they spent out of their pocket or for overpaid money. Some examples
are getting money back for business costs, insurance premiums, and overpaid
taxes. In contrast to regular pay, however, reimbursement is not taxed.

Recognizing Reimbursement
Many businesses have rules about when to pay back employees for costs they paid
for themselves. Most of the time, these costs are related to travel and include
lodging, food, transportation on the ground, and airline fees (travel
reimbursement). Most of the time, reimbursement has something to do with
business costs.

In addition to paying for college courses or classes for continuing education,

employers may also pay for other expenses, such as fees for college courses or
classes for continuing education.

Types of Reimbursement
Insurance
Insurance companies also use reimbursement for things besides business costs.
When someone with health insurance needs medical care right away, they probably
won't have time to call their insurance company to find out what's covered. The
person with the policy may have to pay out of pocket for medicines, medical
services, or other costs.

But when he/she goes for reimbursements, the insurance policy might not cover all
the expenses. Many dental procedures and cosmetic surgeries are not covered by
insurance policies. Thus when you will apply for reimbursement, you might face a
denial of the claim. Thus it is better to check the policy in detail before going for a
medical procedure.

Taxes
Taxes paid to the Central governments are also eligible for reimbursement. Your
taxes are deducted from your salary. If you had not applied for any exemptions,
you might have deposited higher taxes. You can claim for reimbursement of taxes
that you paid in excess. Tax refunds are a type of reimbursement because the
money going back to the taxpayer is money that was overpaid in the past.

Legal
Reimbursement alimony is a type of reimbursement in the world of law.
A judge orders reimbursement alimony, which is a payment made to an ex-spouse
for the time and money spent on the ex-financial spouse's prospects and
development. In a divorce settlement, alimony may be paid back to a person who
worked full-time to put his or her spouse through college and who is now working
and making money.

Requirements for Reimbursement

If you have made an expense which was a business expense, you can claim
reimbursement. The law of most companies requires the bills to be submitted and
the reason for the expenditure. You can submit the bills for reimbursements, and
the company finance department will approve the bills as per your eligibility. For
example, for the hotel bills, a Senior Manager might have a higher limit than a
junior manager. THus, the finance department will check your eligibility and
process the reimbursement as per the eligibility criteria.

SALARY DISBURSEMENT

The disbursements of monthly salary and employee wages have several prime
components structured together in the form of payroll. Amidst the gross and net
salary, there are multiple ‘components’ that collectively form a salary package.
These are imperative for the employers & employees to calculate taxes, EPF,
medical expenses, benefits, travel allowances and other elements.

One of the strongest reasons that most companies opt for Payroll Outsourcing
Services is that framing the salary components is a huge challenge as one
manages the payroll system.

IDEAL SALARY STRUCTURE

 Having understood the payroll definition, comprehending its components is equally
important. The payroll components consist of ‘taxable’ and ‘tax-exempt’, variable,
constant pay, earnings, some allowances, and deductions. Mentioned below are
the most significant ones:

Here’s a blog on how you can perform CTC breakup and decode all the components
of your salary:

 CTC
 Earnings
 Allowances
 Deductions
 Other Statutory Compliances
 Reimbursements

Cost to Company (CTC): It is the total amount that the company directly or
indirectly spends on an employee as their salary package. It consists of the gross
salary and the deductions for provident fund and gratuity.

Earnings: Your earnings can include the basic salary and the various allowances
you get from your employer. The first step to do is to add all of these different
components together. The amount you get is your total earnings and is also
usually mentioned on the employment offer letter.

Allowance: It is a partially or fully taxable amount that an employee receives in

addition to the net salary. Depending on the company's policy, employees may
receive a dearness allowance (DA), house rent allowance (HRA), leave travel
allowance (LTA), children education allowance, medical allowance, phone
reimbursement, special allowance or allowances for car maintenance, driver salary
and books and periodicals.

Deductions: Deductions may include the tax deducted at source (TDS),

professional tax and contributions made towards the employer provident fund, the
employees' state insurance corporation and gratuity. Adding these deductions
gives you the total amount that would be subtracted from your salary. This can
help you calculate the total deductions you would be paying each month.

Other Statutory Compliances :HR statutory compliance includes a wide range of

areas such as employee contracts, minimum wages, overtime payments, employee
benefits, and working conditions. HR professionals and legal experts should work
together to ensure that the organization is compliant with all relevant laws and
regulations.

Reimbursement: Reimbursement is when a business pays back an employee,

client, or other people for money they spent out of their pocket or for overpaid
money. Some examples are getting money back for business costs, insurance
premiums, and overpaid taxes. In contrast to regular pay, however, reimbursement
is not taxed.
 Types of Salary Structures

The two basic types of salary structures are:

 Top-down salary structure: In this type, you add together the assigned amounts of
the different salary components and calculate the gross salary. For example, you
can add the basic salary and the various allowances to get the gross salary.
 Bottom-up salary structure: In this type, you first calculate the gross salary and
then divide each salary component from that. So, if your gross salary is ₹P and the
basic salary is 50% of the gross salary, and the allowances are 25% of the gross
salary, your basic salary is P x 50%, and your allowances are P x 25%.

Pay slip

A pay slip or salary slip, even called pay stub or paycheck is a stamped document
that entails the details of an employee’s monthly payout. It is shared with the
concerned employee on or a few days after the salary is deposited into his/her
account. It is issued to keep a record of the employee’s salary information
including Basic pay, Dearness Allowance, HRA, TA, Bonus, Gross Pay, Net Pay, etc.

It is even produced as a proof of employment to the new employer when joining

another company.

Having understood the payroll definition, comprehending its components is equally

important. The payroll components consist of ‘taxable’ and ‘tax-exempt’, variable,
constant pay, earnings, some allowances, and deductions. Mentioned below are
the most significant ones:

If you wish to understand the salary slip, format terminology.

SALARY SHEET

The structure of a salary slip includes the following elements:

 Personal Information: Name, Employee ID, PAN, and Aadhaar No.

 Bank Details
 Universal Account Number (UAN) and Payroll Number
 Earnings: HRA, TA, and DA, etc.
 Deductions: EPF, ESI, Professional Taxes, and LWF, etc.
 Reimbursements: Arrers, Travel Reimbursement, etc.
 Year To Date (YTD)
 You may also want to include a detailed tax computation slip

The payslip is either created as a Word document or in Excel sheets. The formats
may be different in each case, but the components are more or less the same.
Payslip is considered as one of the most complex official documents to be issued
by the employers. The number of components and breakdown of each element of
the pay slip is not an easy job. Which is why, companies use advanced hr payroll
 software to automatically create downloadable salary slips for their employees.
Besides, the deep insights and detailed reports are cherry on the top for
understanding and analyzing the same.

Minimum Wages in India

A Minimum Wage is a level of income that ensures a sustaining standard of living

while also providing comfort. A minimum wage not just supports the basic level of
employment, but also seeks continuous improvement. In other words, it aims at
preventing the exploitation of labour. It mainly protects the interest of skilled and
unskilled workers.

Governing Act and applicability

The Minimum Wages Act, 1948 governs the computation of minimum wages to the
workers. It was enforced to ensure the employers did not exploit employees with
insufficient wages.

The Ministry of Labour and Employment has classified workers based on a Skill
matrix classification. Workers are classified as

 Unskilled
 Semi-skilled
 Skilled
 Highly skilled

Unskilled workers- These are the workers doing menial work, mainly applying
physical force. Though it is necessary to have familiarity with the working
environment, the work requires little or no prior experience and revolves around
ground-level jobs.

Semi-skilled workers- A semi-skilled worker has a defined set of instructions

(from a higher level) and responsible for the discharge of duties assigned. The
work is limited to the performance of routine operations of limited scope.

Skilled and Highly skilled workers- Establishments may choose to demarcate

responsibilities between skilled and highly skilled in the case of availability of both
or can be handled by one. These works require a thorough knowledge of the trade
and job process, taking up overall responsibilities, practising independent
judgment, possess adequate over-viewing and reviewing skills and managing the
lower level workforce.

The Act is primarily applicable to all establishments, factories, place of business

and industry types. Unscheduled industries are generally excluded, though a state
can add a minimum wage for an occupation or specify it for a sector during a
revision cycle. However, the specifics of areas of applicability differ based on state-
specific rules. Parameters are prescribed under respective State Legislations.
 Rate of Wages

 There is no single uniform minimum wage rate across the country

· Under the Minimum Wages Act, 1948, both Central and State government are
entrusted with powers over fixing the minimum wages

· The State governments define their own scheduled employments and further
release the rates

· Rates are determined for Minimum Wages and Variable Dearness Allowance
(VDA)

· Wage boards are set up to review and fix minimum wages at specified intervals

· The wage rates in scheduled employments differ across states, sectors, skills,
regions and occupations owing to a lot of differentiating factors

 Timely revision of the rates is also conducted

 Like the rates, the revision cycle also differs for states

Penalties for Offences

Non-Payment of Minimum Wage is deemed as an offence under the Central Act.

The penalty attracts imprisonment up to 5 years and a fine of Rs.10,000.

If wages to a worker are below the minimum wage rate specified, it is termed as
Forced labour. ‘Under Payment’ of prescribed wages is also equally considered a
penal offence.

Any agreement whereby an employee reduces their right under this Act shall be
Null and Void.

Therefore, due to the distinction in cost of living, consumption patterns and

regional standards of industrial sectors, the rate of wages within the scheduled
employments is different across states, regions, sectors, skills, and occupations.