Module V: Establishment & Records

Maintenance of service files: Drafting charge sheets, suspension orders for punishment; Enquiry
report; Model standing orders & code of conduct; Drafting Advertisements for appointment &
appointment letters; Bond of service; wage & salary records; ESI, P. F. Gratuity, Pension &
Bonus

Maintenance of service files

The official personnel file for a staff employee is maintained by the employee’s department or by
the primary department in the case of multiple appointments. The department manager, or the
department human resources manager, is responsible for maintaining the personnel files. All staff
personnel records should be maintained in a secured and confidential location. Files containing
confidential information are to be kept in locked cabinets or drawers with limited access, or
similarly secured in automated form if the campus changes to that format in the future.
Departments are expected to maintain reasonable safeguards to ensure the security and
confidentiality of personnel documents. Access to staff personnel files should be restricted to
those with designated authority to review the files such as a supervisor, a department manager, or
a central human resources manager.

Charge Sheet
It means a written statement of certain allegations upon the offender to communicate that what
is done is lawbreaking and not acceptable as per the code of conduct.The objectives of Charge
sheet is highlight and address the exact Point of misconduct committed by the employee and
demanding to submit an explanation in his / her defense and to present it to the management of
the organization.
It is important to note that the Change Sheet format should also include the particular time place
and the occurrences and the way the incident took place.
In other word, Charge sheet is the letter claiming the reasons regarding misconduct or any other
unprofessional behavior of the employee in the organization. The employee needs to give
clarification regarding the act for which charge sheet is given to him.
When to give Charge sheet
It is issued to an employee when an employee is involved in any type of misconduct or bad
behavior with the office colleagues or if the employee is involved in theft of the company’s
property or if he/she is absent from his duties or if he/she is not performing well. Charge sheet is
issued to the employee in above mentioned cases for which he has to give an explanation for the
charges which are imposed against him and if the employee neglects the charge sheet then a
serious action is taken against him which can result in employment termination from the
organization.

Date---------------

To

Mr. /Ms. _______________

We have received a report against you that on the date__________ at__________ time you were
involved in misconduct. The acts mentioned above have been done by you as per the report and
if it is proved strict action will be taken against you.

Accordingly, you have to give a proper explanation for the misconduct you are required to give
explanation within 3 days otherwise action will be taken by the management.

If you fail to submit your explanation as required, it will be assumed that the charges are genuine
and suitable action will be taken against you.

The charges against you, are serious, hence you will be suspended till further action

Please acknowledge the receipt of the letter.

Authorized Signatory
Suspension Letter

7th September 2016

Hello Srinivas,

RE: Suspension Information

This letter is to inform you that as a result of your actions on ( dt. ), you have been issued a
suspension for ( Duration)

On ( perticular date ) you have violated the Employee Standards code every employee is
expected to follow.

At this time your suspension you will not receive pay from the organisation.

You are expected to return to work on July 21st, 2009.

Below are the terms of your suspension:

1) Unless contacted beforehand, you are not permitted to enter office premisses until the
suspension is over. In the meantime any office property should remain in your possession.

2) You are not permitted to use the official email system to correspond with your fellow
employees.

3) We advise you to refrain from making any public comments about the incident. Our lawyers
have been instructed to defend our position to the media.
If you have any questions regarding this suspension or if you have any important information
that could shed further light on these allegations, please do not hesitate to contact me.

Regards,

Human Resources

Model Standing Orders

The Ministry of Labour and Employment, with an intent of standardizing the conditions of
employment in industrial establishments employing three hundred or more workers to whom the
Occupational Safety, Health and Working Conditions Code, 2020 ("Occupational Safety Code")
applies, has issued the draft Model Standing Orders for Services Sector, 2020 ("Model Standing
Orders"). The term 'establishment' under the Occupational Safety Code inter alia includes a place
where any industry, trade, business, manufacturing or occupation is carried on with ten or more
workers employed.

Some of the key features/provisions of the Model Standing Orders are:

1.Classification of Worker. For the purposes of the Model Standing Orders, the workers have
been classified into different categories as below:
1. Permanent Worker, i.e., a worker who has been engaged in an industrial establishment
and has completed probation period of six months within the industrial establishment;
2. Temporary Worker, i.e., a worker who has been engaged for work which is of an
essentially temporary nature and likely to be finished within a limited period;
3. Apprentice, i.e., a person who is undergoing apprenticeship training pursuant to a
vcontract of apprenticeship;
4. Probationer, i.e., a worker who is provisionally employed to fill a permanent vacancy and
has not completed six months' service;
5. Badli, i.e., a worker who is appointed against the post of a permanent worker or
probationer who is temporarily absent; and
 6. Fixed Term Employment, i.e., engagement of a worker on the basis of a written contract
of employment for a fixed period, provided that such fixed term worker is entitled to
allowances and other benefits similar to that of a permanent employee doing similar work
as well as being entitled to gratuity if he renders service under the contract for a period of
one year.
2.Display of Work Hours. The industrial establishments are required to publish notices which
shall inter alia display periods of hours of work for all categories of workers, any change in the
periods of hours of work, number of shifts, shift timings etc., days being observed as holidays,
list of national and festival holidays, pay days, wage bands payable to all categories of workers
etc. Such notices are required to be displayed on the electronic notice board or notice board and
website or human resource portal/intranet of the industrial establishment.
3.Concept of Shift Working. The Model Standing Orders allow the industrial establishment to
implement shift working, i.e., more than one shift may be worked in a department or departments
or any section of a department of the industrial establishment at the discretion of the employer. In
case of shift working, the worker shall be liable to be transferred from one shift to another. No
shift working shall be discontinued without twenty- one days' written notice being given to the
workers.
4.Work from Home. The Model Standing Orders also recognize the concept of 'Work from
Home' and states that the employer may allow a worker to work from home for period as may be
determined by the employer and subject to such conditions as may be agreed between the
employer and the worker.
5.Payment of Wages. The Model Standing Orders prescribe that all payments to workers,
including payment of wages, will be paid by crediting to the bank account of the worker on
electronic mode or digital form and intimation concerning the payment made will be sent to the
worker through SMS, e-mail of social media communication such as WhatsApp or by issuing a
slip.
6.Transfer Policy. The employers are permitted to have a transfer policy within the industrial
establishment and the said transfer policy will need to be known to all workers for which the
details of the policy are to be made available on the human resource portal of the establishment.
A worker may be transferred according to the transfer policy and exigencies of work from one
shop or department to another or from one station to another or from one industrial establishment
to another under the same employer. However, the wages, grade, continuity of service and other
conditions of service of the worker shall not be adversely affected by such transfer.
7.Pre-Medical Examination. The Model Standing Orders also recognize the requirement of
conduct of pre-medical examination of the employees, which is a common practice prevailing
currently, and in this regard provides that wherever the recruitment rule or any contract of
appointment of fixed term employment specify medical examination of a worker, on his first
appointment, the employer will at its expense make arrangement for the medical examination.
8.Protection of Confidential Information. Recognizing the importance of protection of
confidential and proprietary information of the employers, the Model Standing Orders restrict a
worker from taking any papers, books, drawings, photographs, instruments, apparatus,
documents, or any other property either in electronic form or physical form, of an industrial
establishment out of the work premises except with prior written permission. Furthermore, the
workers are also restricted from passing or causing to be passed or disclosing or causing to be
disclosed any information or matter concerning the manufacturing process, trade secrets and
confidential documents of the industrial establishment to any unauthorized person, company, or
corporation without the written permission of the employer.
9.Conditions on Dual Employment. The Model Standing Orders also restrict dual employment
and accordingly provide that a worker shall not at any time work against the interest of the
industrial establishment in which he is employed and shall not take any employment in addition
to his job in the industrial establishment, which may adversely affect the interest of his employer.
However, the employer may permit a worker to take up additional job, assignment with
conditions or without conditions and the worker shall obtain prior permission of the employer.
10.Stoppage of Work. The employer may, at any time, in the event of fire, catastrophe,
break-down of machinery or stoppage of power supply, disaster, pandemic, epidemics, civil
commotion or other cause beyond his control, stop any section or sections of the industrial
establishment, wholly or partially for any period or periods without notice. In cases where the
workmen are laid off for short periods on account of failure of plant or a temporary curtailment
of production, the period of unemployment will be treated as compulsory leave either with or
without pay, but where workers need to be laid off for an indefinitely long period, their services
may be terminated after giving them due notice or pay in lieu thereof.
11.Notice for Termination of Employment. The Model Standing Orders prescribe terminating
of employment of a permanent worker with one month prior written notice or wages in lieu
thereof subject to the provisions of the Industrial Relations Code, 2020.
12.Misconduct, Suspension and Inquiry. In case of a worker being engaged in an act
amounting to 'misconduct', the worker may be suspended by the employer pending investigation
or enquiry into complaints or charges of misconduct against such worker. Such investigation or
enquiry shall be ordinarily completed within ninety days from the date of suspension and the
worker shall be paid subsistence allowance, at the prescribed rates, during the period of
suspension which shall be subject to the worker not taking any employment elsewhere during
such period of suspension. The term 'misconduct' has been defined to inter alia include:
1. theft, fraud or dishonesty in connection with the employer's business or property;
2. taking or giving of bribes or an illegal gratification whatsoever in connection with the
employer's business or his own interests;
3. habitual late attendance and habitual absence without leave or without sufficient cause;
4. drunkenness, fighting or riotous, disorderly or indecent behavious while on duty at the
place of work;
5. habitual neglect of work;
6. acceptance of gifts from subordinate employees;
7. conviction in any court of law for any criminal offence involving moral turpitude;
8. threatening, abusing or assaulting any superior or co-worker; and
9. involvement in unauthorized access of any IT system, computer network of the
employer/customer/client

Inquiry Report
code of conduct
It is the most common policy within an organization. This policy lays out the company’s
principles, standards, and the moral and ethical expectations that employees and third parties are
held to as they interact with the organization. A code of conduct is an integral part of compliance
efforts as it provides documentation that an employee or third party has violated company policy
if illegal activity arises. Let’s explore what a code of conduct means and the impact it can have
on an organization.

What is a Code of Conduct in the Workplace?

A company’s code of conduct is a policy that outlines principles and standards that all employees
and third parties acting on behalf of the company must follow. The code of conduct reviews the
organization’s mission and values and ties these ideals to professional behavior standards. In
many workplaces, codes of conduct become benchmarks of performance.

Why is Having a Code of Conduct Important?

A code of conduct serves as a reference point for employees to make better choices on a
day-to-day basis. While every possible ethical dilemma an employee might encounter won’t be
spelled out, the code should lay out the guiding principles by which employees should act and
therefore lead there workforce to make the right decision.

Having a strong, ethical code of conduct is essential to building a culture of compliance

throughout an organization. A code of conduct is an excellent exercise to focus the leadership
team on how employees should behave at work and the standards they should uphold. These
standards can have massive impacts on how the organization functions, how employees conduct
themselves daily, and how the workforce interacts with others on behalf of the organization.

On top of ethical reasons, there are legal reasons for implementing a code of conduct as well. All
public organizations in the U.S. are required by law to have a code of conduct in place. Private
organizations would be smart to take note of this as well.
What Should a Code of Conduct Include
There are a few common elements that every code of conduct should feature. An ethical code of
conduct should include a letter from the CEO, reiterate the company’s values, and outline how
violations are handled.
The letter from the CEO should emphasize the organization’s commitment to these standards.
The note is an opportunity to express the leadership team’s prioritization of compliance and
ethics.
The code of conduct is a great place to drive the organization’s values home with employees and
third parties because they will be signing and therefore agreeing to uphold these standards.
Selecting your organization’s values is a critical step in building a flourishing business, and
establishing a culture of compliance.
Finally, a code of conduct should inform how violations of the code of conduct are handled
internally at the organization and mention the external legal risks. The code should also review
the proper channels for reporting misconduct if out-of-line behavior is witnessed.

What is an Effective Code of Conduct in an Organization?

Best-in-class codes of conduct have a few traits in common.
First, they are regularly reviewed. Updating the organization’s code of conduct on an annual
basis ensures that the content is up-to-date and relevant as things are always changing within
organizations. The code should be a living, breathing document that is highly relevant to
employees and their work.
Second, the signatures are properly managed by a policy deployment solution that tracks
signatures and time stamps dates. You can write the best code of conduct in the world, but if you
don’t correctly deploy it to your employees and third parties, what was the point? Strive for your
employees and third parties to sign the code of conduct and understand the contents and
implications.
Lastly, an effective code of conduct is digestible by the audience it is intended for. It is not
inundated with legal speak that only the lawyers at the company can understand but instead
written in an uncomplicated format that is easy for all to comprehend. While this may seem like
a simple point to emphasize, its impact on the adoption and impact of the code of conduct within
an organization can not be overstated.
Drafting Advertisements for appointments & appointment letters
In the current climate and with a record number of jobs, attracting candidates has never been
tougher. When recruiting, your job advert is your first chance to attract talented individuals to
your roles. This is also the first impression that candidates will get of your business and you
know what they say about first impressions!

Structuring your job advert

While it might be tempting to get creative when advertising your jobs, you should always follow
a basic format.
In fact, getting the structure right is an important first step towards writing a strong job advert.
This will ensure that you have a clear layout and only include the most relevant information.
We will discuss each section in more detail below, but for now, here is the basic checklist to
follow when writing your job advert:
● Job title
● Salary
● Location and details of any remote/flexible working options
● Introduction to your business
● Role and responsibilities
● Key requirements (qualifications and skills)

What to include in each section

We will now breakdown the job advert one section at a time to help you gain a better
understanding of what to include. We’ll also illustrate this with examples.

1. Job title
Arguably, the most important part of writing an advert is getting the job title right. This is the
best way to attract the most relevant candidates.
It can be tempting to come up with creative or unique titles to try to attract candidates. But the
truth is, these could actually damage your chances. Be specific and use recognisable keywords.
Remember, when conducting their search, job hunters will use these keywords and if your job
title doesn’t conform, it could be harder for them to find your vacancies.
So don’t beat around the bush. If it’s a ‘Marketing Executive’ that you want, make sure that’s
what you’re asking for. You could also include the seniority in your titles e.g junior or assistant.

2. Salary and location

Below the job title it is common practise to include the salary (or salary bracket) and the
location. While it’s not mandatory to include this information, it is an effective way to ensure
you attract the right candidates. Without this information you risk a host of job hunters applying,
despite not suiting the working patterns. Not only this, but you might find a great candidate, only
to lose them further down the line because the salary wasn’t what they were expecting. It’s better
to be clear right from the start.
Using the right job title, salary, location and remote/flexible working options is particularly
important as it also gives your vacancies a better chance of appearing in Google’s job search
index.

3. The introduction
Next you need a small introduction – just a few sentences – which outlines your business and the
role you’re advertising for. This really doesn’t need to be long as you’ll go into more detail later
on.
This section should contain keywords that help candidates know right from the start if this role is
something they’d be interested in. Try to include the job title, industry and some relevant skills
or experience that would be advantageous.
This is also your chance to let the candidate know a little bit more about your business and why
you’re a great company to work for. Think of this as a sales pitch; why should talented
candidates want to come and work for you?

4. The objectives
After introducing the position, it’s a good idea to set out the goals or objectives for the candidate.
Again, this doesn’t need to be long, just a few sentences will do.
This is a nice opportunity to help the candidate understand the role they’ll play, and the
contribution they will make within the business.

5. Responsibilities
Next it’s important to outline what the role will entail and list a few of the main responsibilities.
It’s a good idea to break these up into smaller paragraphs, or better still, bullet points. This makes
it clearer and easier for candidates to digest.
The responsibilities of the role are important to candidates. No one wants boring daily tasks, or
to end up disliking their job. As such, it’s vital to always be honest about what will be expected
of candidates.

6. Requirements
Now you need to outline the key requirements of the position; there are a number of parts to this.
The requirements themselves will depend on the level of the role. It can be helpful to use bullet
points in this section as well.
State whether your candidate needs qualifications, for example specific A-Levels, certificates or
a degree. Make sure you clarify whether these qualifications are vital in order to be considered
for the role, or whether they’re just advantageous.
You also need to outline any personality traits or soft skills you wish your candidate to possess.
For example, maybe you want them to be enthusiastic, with good communication skills and have
an interest in the industry.
If you would like someone with a certain amount of experience, this is your chance to highlight
this. You may also require your candidate to have a background in your industry.

6. Your company
You should also take this opportunity to outline any great benefits or perks that the candidate
would receive in your employment. Today’s employees want to feel valued at work. Workplace
perks are important to today’s professionals, so don’t forget to include these in your job advert,
and include any around well being and mental health, not just pensions and free fruit on a
Monday!
appointment letter
It is a document that officially confirms a candidate’s employment. Typically, after a successful
interview, the candidate is issued an offer letter. After this, the candidate gets a certain time
period to review and negotiate the terms and conditions of the offer, like salary structure. Once
the negotiation is done, the HR department issues the official appointment letter to the candidate.

How to write an appointment letter

● A formal letterhead to make it official and the candidate’s name, contact information, and
issuance date at the top of the letter.
● Include a greeting using the candidate’s official name and preceded by a salutation, such
as “Dear Atul Sharma.”
● For writing the letter’s content, either use the traditional paragraph style, where the
content is written in full sentences. Or the modern style, where the key sections are listed
as bullet points that include small paragraphs.
● In the introduction paragraph, offer the role formally to the prospective candidate. The
offer should include the recipient’s official job title.
● Provide a brief description of the candidate’s role and responsibilities in the next section.
● Include the recipient’s starting date as discussed during the interview or job offer stage,
along with a brief reference to the conversation.
● Include the offered position’s working schedule, such as expected daily hours with the
start and end time or the expected weekly hours. Also, mention if the role is full-time or
part-time.
● Include the official salary for the position as discussed during the job offer and
negotiation stage. Also, include other essential parts of the gross salary in this section,
such as pension plans, gratuity, insurance plans, etc.
● Include all other important additional terms and conditions (such as dress code) towards
the end of the letter.
● Close the letter by stating if the recipient needs to sign the document at the end. Include
the deadline for acceptance or response to the letter in this final section.
Date: _______

Name: Mr. _______________,

Address: _________________

________________________

Dear Name: ______________,

Please refer in the meeting we had with you. We are pleased to offer you an

appointment in our company as “Team Leader”. You will be initially at Delhi on joining.

Your appointment will be subject to the terms and conditions indicated in “Annexure - A”

attached and the Rules and Regulations of the company prevailing from time to time

Details regarding your salary and other allowances & perquisites are indicated an

Annexure – B.

We hope to provide you a challenging and rewarding Career ensuring a high level of job

satisfaction and sample opportunities for career development.

Please return the duplicate copy of this letter duty signed as an acceptance of our offer

of appointment along with terms of appointment (Annexure – A), details of perquisites

(Annexure – B), your salary details (Annexure – C), duty executed by you.
With best wishes,

(Name: _________________)

Chief Executive Officer

Terms of Appointment

Every appointment with be subject to the Rules and Regulations of M/s.

____________________, enforce and as amended from time to time. Where the company

changes or introduces policies and procedures in relation to its staff members these

will be deemed to apply to the employment.

Every employment will commence from the date of joining as mentioned in the

Appointment letter. There will be a Probation period of three months and confirmation

of employment will be based on satisfactory performance during this period.

During the probation period, the employment can be terminated by either party by giving

one week’s notice. After the confirmation of employment the same may be terminated

by either party by giving one month’s notice in writing or one month’s basic salary in lieu

of notice should the circumstances warrant it.

The staff member will be liable to transfer to any place of business of the organization

whether existing or acquired later on or from one department to another or from one

discipline to another in the interest of the company.

The staff member may be retired on reaching the age of 58 years, if found necessary by

the company.

Whilst employed with the company:

○ The staff member shall not undertake any other employment or engage in any

external activities without prior written approval of the company.

○ The staff member shall carry out all duties and responsibilities assigned from

time to time by the management and/or others authorized by the company to

assign such duties and responsibilities.

○ The staff member shall not at any time or times without the consent of the

company in writing disclose divulge or make public except under legal

obligations any of the process accounts transactions and dealings to the

company whether the same is communicated and/or becomes known to the

staff member in the course of services or otherwise. All information that

comes to the knowledge of the staff member by reason of the employment

with the company shall deem to be confidential.

○ The staff member will be responsible for the safe keeping and return in good

condition in of all company’s belongings which may be in your use custody or

charge including proper handing over of the assignment (s) at hand.

○ The staff member will keep us informed of any charge in the residential

address as, the address mentioned in over CV will be deemed as residential

address unless there is a written communication from you.

 ○ All payments will be made in accordance with the income tax laws.

○ The staff member shall be required to apply and maintain the highest

standards of person conduct and integrity with all company policies and

procedures.

The contract of appointment shall be deemed to have executed in the. National Capital

Territory of Delhi and the staff member shall be under the administrative control of the

Corporate as well as Head Office even though such staff member may be servicing

outside Delhi. In case of any dispute or difference regarding terms and conditions of the

appointment the cause of action would be deemed to have arisen with the Jurisdiction

of the National Capital Territory of Delhi.

I shall abide by the above terms and conditions.

(Signature of Mr. ____,) Date: ______,

Details of Perquisites & Allowances:

Name - Mr. _______________

Designation - __________________
Grade - __________________

Location - __________________

Basic Salary - __________________

Date of Joining - __________________

Probation - Three months from the date of joining.

Confirmation - On successful completion of probationary period.

In addition to the basic salary mentioned in the Annexure – C of this letter, other

allowances and benefits payable will be as unde.

1. House Rent 00% of the Basic Salary

Allowance

2. Leave Travel Equivalent to half month’s basic salary per annum

Allowance claimable only after completion of each year of

continued service.

3. Medical Half month’s basic salary per annum in the first year

Reimbursement credited on six monthly basic for self and dependents

as declared at the time of joining. Subsequently in
second year and onward the medical reimbursement
will be admissible @ one month basic salary.

4. Composite Up to 00% basic salary one month at actual.

Reimbursement

Compos to reimbursement can be claimed under any of the following heads:

 1. Outfit Reimbursement up to 00% basic salaries

2.Conveyance Reimbursement Up to 00% Basic Salary which can be

claimed every month as actual

conveyance from home to office and

back.

3. Association Benefit In addition to the above you will also be

eligible to a sum on Rs. _________/- on

successful completion of 3 Years of

continued service with

M/s.______________,

4. Provident Fund As per act.

5. E.S.I. if applicable As per act.

6. Gratuity As per act.

7. Onus As per act.

(Name: _________) (Signature of

Mr.________)

Chief Executive Officer Date: ______,

Employment Bond
It is basically an agreement which the company and the employee enter into which among the
other terms contained therein states that in consideration of the training given to the Employee
and the money spent by the company in imparting such training, the Employee will remain in the
services of the company for a particular period. In case the Employee breaches the provisions of
the Agreement, the Employee will be liable to pay a certain sum of money, be it the expense
incurred by the company in training of the Employee. In the particular case where the company
feels that the Employee may not be able to pay the amount, the company has a Guarantor who
guarantees that they would take responsibility to ensure that the Employee adheres to the terms
of the Bond. In case of breach, the Guarantor will be jointly liable to pay the Bond amount to the
company. The Bond may also contain confidentiality and non competition clauses. The legality
of the Bond shall depend upon whether there was consideration in the form of training or
otherwise.
Our issue of contention is that whether such bonds are leagally enforceable or not. The
contractual clauses are taken up in the Contracts Act, 1872. The Contract Act states that such a
contract might be legal even if it levies certain conditions and restrictions if the mentioned
restrictions are valid and reasonable.

The following are the requirements of a valid employment bond agreement.

1. The agreement must be signed by the parties with free consent.
2. The conditions stipulated must be reasonable.
3. The conditions imposed on the employee must be proved to be necessary to safeguard the
interest of the employer.

BENEFITS OF EMPLOYMENT BOND:

An employment bond is reasonable because it protects the interest of the employer. It enables the
employer to claim compensation for time and resources spent on training an employee. If a bond
is considered a valid contract, the company can go to court. The main reason for an employer to
include an employee bond is to prevent the employee from leaving the organisation, or retention.
Yet, this does not encourage an employee to stick with the organisation. A bond does not
encourage, but rather discourages employees from staying with the organisation.
Wage and Salary Administration
It is alludes to decide and actualize the successful strategies and practices of worker
remuneration working in an association. The basic purpose and objective of wage and salary
administration is to ensure and maintain an equitable wage and salary structure of the employees
and workers. Wages and salaries are often considered one of the largest components of cost of
production and also have direct implications for growth and profitability of the organisation /
company.

What are Payroll Records?

A payroll Record can be defined as a list of all the employees of that company in which every
information related to the payments made to the employees which they are entitled to receive,
such as salaries, wages, bonuses, taxes, etc. are recorded so that at every interval there can be a
proper track of each payment which are paid to those employees from the employer’s point of
view. If a discrepancy occurs, then the same could be pointed out easily from the records.

Advantages
1. The system provides us with easy calculations, making the entire pay mechanism very
lucid.
2. This facilitates accuracy so that the correct amount can be paid out, and it won’t raise any
further discrepancies.
3. The computerized payroll system reduces the chances of errors and makes an easy flow
of data and information that can be trusted and re-used.
4. This system has an appropriate structure for deductions and payments that are
automatically set in the record to be used to calculate salaries/wages.
5. This can be treated as a safe backup option, and any information demanded
retrospectively; the records can be useful then.
6. The record-keeping of the payroll system reinstates the faith in the employees that a
properly organized and documented form is maintained for their earnings. Whatever
deduction will be made, proper proof will be shown. In the future, if an employee
demands a payroll record, the company would be in a position to present them with
proper backup available to them.
 7. This system is a cost-effective mechanism through which every penny paid/deducted to
the employee can be tracked. The system gives back to the organization to maintain the
data correctly and prevent the organization from any future hassles.
8. As the system is very cost-effective from the previous point, it saves time greatly because
it does not allow any discrepancies and prevents any duplicity of work. For every fixed
period of the interval, the correct data allows the organization for an error-free future of
work.
9. In case of any inspection/audit/background check, if any authority demands any
personnel records, this can be proof of evidence. It will not only be a savior for a
well-maintained system but also will make a difference in the goodwill of the company.
10. This can be a major tool for forecasting the company. A company’s major part of profits
pays salaries and wages to its employees. If an estimated budget can be predicted for a
future period, it can be a great tool for forecasting future costs and budgets for the
company.
11. The organization can well plan its costs and then make out the reserves/investments
accordingly.

Disadvantages
1. A payroll record holds data, and information can be at risk for data security, theft, or data
leak. The sensitive information can be made open if it is not well protected.
2. The second disadvantage can be cyber fraud, which is almost very common. The rivalry
amongst companies can be a root source of this problem.
3. The information access/control cannot be given to all. Only the person in charge of the
payroll record should be familiar with the information. The person should be trustworthy
enough not to leak out the company’s sensitive data.
4. The last but not the least disadvantage can be the cost involved. The software, skilled
operators, and the infrastructure required to set up the payroll record system are huge,
which can be a barrier for a few organizations to meet up.
ESI
The full form of ESI is Employees State Insurance. ESIC- employee state insurance corporation
is set as an autonomous body by the government to manage the ESI scheme.
ESIC or Employee’s state insurance scheme is a self-financing social security and health
insurance scheme for Indian workers regulated by the Indian government. ESIC scheme comes
under the Indian ESI act of 1948 whose main objective was to protect the employees in their
trying times such as disability, illness, maternity, employment injury, and so on. If the employee
has an ESIC scheme they can claim that insurance money in medical care for their family.
ESI scheme is applicable in all forms of working establishments such as corporate companies,
factories, entertainment industry, medical care, food business, etc. If a company has more than
10 employees then this scheme is applicable in that organization. Employees whose monthly
income is Rs. 21,000 or less can avail of the benefits of this scheme.

What is the ESIC act 1948?

The ESIC act 1948 is made to secure employees in times of adversity and it is applicable for all
the working establishments. This act is applied to every person with or less than 21,000 income.
It benefits them by giving an unemployment allowance equivalent to 50% of the wage for up to
two years. For instance- ESI hospitals and dispensaries during the IP period are given
unemployment allowance for medical care. Moreover, expense on fees and traveling allowance
for vocational training is also borne by ESIC.

Provident Fund { PF }
PF stands for Provident Fund. It is a scheme for salaried employees to invest during work life
and enjoy the benefits after retirement. It is a compulsory, government-managed retirement
savings strategy for employees, who can contribute a part of their savings towards their pension
fund, every month. The entire process is monitored by EPFO (Employees Provident Fund
organization). Any organization that has more than 20 employees is entitled to PF and must
register with the EPFO.
In 1952, the PF (Provident Fund) or EPF scheme was introduced under the Employee’s
Provident Fund and Miscellaneous Act. All the rules and regulations are defined by the
Employee Provident Fund Organisation. The EPFO’s activities are managed by the Ministry of
Labour and Employment.
PF contribution is made by both the employees and the employer. The contributions get
accumulated in the provident fund in the name of the employee. The contribution of the
employer is 12% of the basic wage plus DA (Dearness Allowance).

Gratuity
It is a monetary benefit provided by an employer to an employee for the services rendered to the
organization. It is paid at the time of retirement or resignation, provided the employee has
completed at least 5 years of continuous service before leaving the organization. In certain
circumstances, such as death or disablement, the rule of continuous 5-year service is relaxed.
Here we will talk about the gratuity act, eligibility criteria, gratuity formula, calculation, and
taxation rules on gratuity in detail.

What is Gratuity in Salary?

Gratuity is a benefit which is payable under the Payment of Gratuity Act, 1972. It is a financial
component offered by an employer to an employee in recognition of his or her services rendered
to the organization. It is typically a portion of the salary an employee receives and there is no set
percentage of the gratuity amount an employee can receive.

How does Gratuity work?

The employer may either pay their employees the gratuity amount from their own account or
may opt for a general gratuity insurance plan with a service provider. The company then pays an
annual contribution to the service provider, and in return, the insurance company can pay the
gratuity amount to the employee, by following policy rules and regulations. The gratuity amount
is totally paid by the employer without any contribution from the employee.
Gratuity Act
The Payment of Gratuity Act came into force in 1972. The act covers all employees working in
mines, companies, ports, plantations, and other such organizations that have more than 10
employees. Unlike the provident fund, the gratuity amount is fully paid by the employer without
any contribution from the employee.
Pension
It is a retirement fund for an employee paid into by the employer, employee, or both, with the
employer usually covering the largest percentage of contributions. When the employee retires,
she’s paid in an annuity calculated by the terms of the pension. Pension funds are far less
common than they used to be, with labor unions and public employees making up the vast
majority of pension holders.

pension, series of periodic money payments made to a person who retires from employment
because of age, disability, or the completion of an agreed span of service. The payments
generally continue for the remainder of the natural life of the recipient, and sometimes to a
widow or other survivor. Military pensions have existed for many centuries; private pension
plans originated in Europe during the 19th century.
Eligibility for and amounts of benefits are based on a variety of factors, including length of
employment, age, earnings, and, in some cases, past contributions. Benefits are sometimes also
arranged to complement payments from public social-security programs. Although public and
private pension plans have undergone parallel development in the United States and Britain, in
other countries—e.g., Italy and Sweden—the existence of social-security programs paying
generous retirement benefits has to some extent precluded significant development of private
pension plans. In other cases, though, as in Germany, private programs have been widely adopted
in spite of large social-security benefits.

What Is a Pension Plan?

A pension plan is an employee benefit that commits the employer to make regular contributions
to a pool of money that is set aside in order to fund payments made to eligible employees after
they retire.

Bonus
It is a financial compensation that is above and beyond the normal payment expectations of its
recipient. Companies may award bonuses to both entry-level employees and to senior-level
executives. While bonuses are traditionally given to exceptional workers, employers sometimes
dole out bonuses company-wide to stave off jealousy among staffers.
Bonuses may be dangled as incentives to prospective employees and they can be given to current
employees to reward performance and increase employee retention. Companies can distribute
bonuses to its existing shareholders through a bonus issue, which is an offer of free additional
shares of the company's stock.
Understanding Bonuses
In workplace settings, a bonus is a type of compensation an employer gives to an employee that
complements their base pay or salary. A company may use bonuses to reward achievements, to
show gratitude to employees who meet longevity milestones, or to entice not-yet employees to
join a company's ranks.

Incentive Bonuses
Incentive bonuses include signing bonuses, referral bonuses, and retention bonuses. A signing
bonus is a monetary offer that companies extend to top-talent candidates to entice them to accept
a position—especially if they are being aggressively pursued by rival firms. In theory, paying an
initial bonus payment will result in greater company profits down the line. Signing bonuses are
routinely offered by professional sports teams attempting to lure top-tier athletes away from
competitive clubs.