Did you know that a whopping 86% of job seekers go through company reviews and ratings before applying for a position? And what’s more surprising is that half of them would turn down a job offer—even if it came with a higher salary—if they came across negative reviews. This underlines the critical role of HR professionals in maintaining a company’s reputation and attractiveness to potential employees.
One effective way HR achieves this is by establishing and consistently implementing well-documented HR policies and procedures. These policies not only govern internal practices but also communicate the organization’s values and culture externally, an increasingly important signal now that candidates research employers on AI-powered review summaries and search engines before they ever apply.
With one of the world’s largest workforces, HR policies in India carry even more weight, especially in 2026. India’s four Labour Codes, on Wages, Industrial Relations, Social Security, and Occupational Safety, became effective from 21 November 2025, replacing 29 older central labour laws, and central and state rules are still being finalised through 2026. That means most existing HR policy documents in India need a fresh compliance pass this year, not a cosmetic update.
Curious to know more about the importance of HR policies and procedures? Join us in this blog as we walk through the essential guidelines for 2026, aiming to empower employees and HR professionals with a deeper understanding of their rights and responsibilities within the workplace.
What is HR Policies in India?
A human resources policy serves as the backbone for organizing, managing, and administering a company’s most valuable asset—its employees. It’s essentially a roadmap that outlines guidelines for various aspects of employment, including recruitment, compensation, benefits, and training.
Moreover, research indicates that a thorough HR policy streamlines operations, fosters a positive work culture, and enhances employee satisfaction. A study by the Society for Human Resource Management (SHRM) found that companies with clearly defined HR policies experience higher levels of employee engagement and productivity.
In 2026, that roadmap also has to account for how AI-driven search and answer engines summarise a company’s HR practices. Job seekers increasingly ask AI assistants questions like “does this company have fair leave policies” before applying, which means the way a policy is written, and how consistently it is enforced, now shapes employer brand well beyond the careers page.
Further, because people are critical to business success, HR strategies need to address both managers’ and workers’ needs and perspectives. By striking this balance, organizations can ensure fairness, transparency, and alignment with their overarching values and objectives.
In conclusion, a well-crafted HR policy reflects a company’s identity, influencing its reputation and attractiveness to potential hires, as well as improving retention. But what exactly constitutes a well-designed HR policy? Let’s look at the key elements of HR policies and procedures that Indian companies need to get right in 2026.
Key Points of HR Policies in India
Based on our research, here are the essential HR policies in India that every company should have in place:
1. Employee Contract
Leading the charge among HR policies in India are the regulations governing employee contract policy. This policy acts as a vital blueprint and explains:
- Job Description: Providing a detailed outline of the roles, responsibilities, and performance expectations associated with the position. According to a survey by Glassdoor, job descriptions that accurately reflect the role and responsibilities can increase applicant quality by 36%. Next, the contract clarifies the compensation structure.
- Compensation Structure: Defining the intricacies of salary, benefits, bonuses, and other financial incentives. Under the Code on Wages, 2019, now in force since 21 November 2025, an employee’s basic pay must be at least 50% of total CTC, which forces most Indian employers to restructure existing salary breakups rather than simply update the offer letter template.
- Work Hours: Clearly stipulating the standard working hours, overtime policies, and any flexibility arrangements. A Gallup study found that employees with flexible work schedules are 1.3 times more likely to be engaged at work. Hybrid and four-day-week pilots have also become common enough in Indian IT and services firms in 2025-26 that many contracts now explicitly define “core hours” instead of a fixed shift.
- Termination Procedures: Outlining the protocol and legal considerations for termination or resignation. As per a report by Willis Towers Watson, a termination policy can reduce legal risks and ensure fair treatment of employees. Fixed-term employees are now entitled to gratuity on a pro-rata basis under the Code on Social Security, regardless of the earlier five-year continuous-service requirement.
For instance, within the context of an IT company in India, an employment contract for a software engineer would include specifics like job title, duties, compensation package, contractual hours, probationary period, termination clauses, and compliance with Indian labor laws. These rules make sure that everyone is treated fairly and that the company complies with the law. This helps to create a positive atmosphere at work and reduces the risks for both employers and employees.
2. Code of Conduct
The Code of Conduct serves as a compass guiding employee behavior within the workplace. This policy outlines expectations, sets boundaries, and details the repercussions of non-compliance. To achieve this, the code of conduct policy of an Indian company typically includes guidelines on:
- Professional Behaviour: Establishing standards for professionalism, respect, and integrity in all interactions. According to a survey by Harvard Business Review, 80% of employees who get mistreated spend time considering bad behaviour, and 48% reduce their efforts. Next, the policy addresses anti-corruption measures.
- Anti-corruption Measures: Prohibiting bribery, kickbacks, and other forms of corrupt practices. The Global Economic Crime and Fraud Survey 2022 by PwC revealed that 52% of organisations in India experienced economic crime in the past two years, highlighting the importance of anti-corruption policies.
- Conflicts of Interest: Addressing situations where personal interests may conflict with the company’s interests. A study found that 43% of employees globally have observed unethical behaviour related to conflicts of interest in their corporations.
- AI and Data Usage: A genuine 2026 addition: with generative AI tools now common in Indian workplaces, codes of conduct increasingly need explicit rules on feeding confidential company or client data into public AI tools, and on disclosing AI-assisted work where it affects decisions like hiring or performance review.
- Social Media Usage: Providing guidelines on responsible and professional use of social media platforms, both during and outside of work hours. Research by CareerBuilder showed that 70% of employers use social media to screen candidates during the hiring process, emphasising the need for clear social media policies.
- Disciplinary Procedures: Outlining the steps and consequences for breaches of the Code of Conduct. According to an Ethics & Compliance Initiative (ECI) survey, companies with effective discipline and ethics cultures are 467% more likely to show positive impact than those with ineffective practices.
By communicating these principles, the Code of Conduct not only promotes a culture of ethics and compliance, but also protects the organization’s reputation and integrity. In short, it explains what employees must do to contribute to a good working environment.
3. Leave Policy (among most-discussed HR policies in India)
The HR leave policy is one of the most widely discussed of all HR policies and procedures. This policy tells employees about the different types of leave they can take, including:
- Sick Leave (SL): Provides employees with time off to recover from illness or injury without loss of pay. According to the ILO, providing sick leave benefits can reduce employee turnover rates by up to 50%.
- Casual Leave (CL): Intended for short-duration absences, typically for personal reasons or unforeseen circumstances. A survey by Kronos Incorporated found that 43% of employees cited the availability of paid time off improves job satisfaction.
- Earned Leave (EL): Accrued based on the length of service and typically used for planned vacations or personal time off. The Indian labour laws mandate that employees earn leave for every 20 or 15 days of work, depending on their age, ensuring fair and equitable distribution of leave benefits.
- Leave Without Pay (LWP): Allows employees to take time off from work without pay, subject to approval and company policies. Research by Harvard Business Review suggests that offering unpaid leave options can improve employee retention and morale by providing flexibility during challenging life circumstances.
- Maternity and Paternity Leave: Provides new parents with time off to care for and bond with their newborn or newly adopted child. Access to paid parental leave has been repeatedly linked to better maternal and child health outcomes and to gender equality at work. More Indian employers are also now voluntarily extending paid paternity leave, even though it isn’t yet mandated by central law, as a retention lever in competitive hiring markets.
Earned leave accrual is not affected by public holidays, ensuring fair compensation for employees. By aligning a leave policy with legal requirements and employee needs, organisations can improve satisfaction, well-being, and productivity while staying compliant with labour law. Writing the policy is only half the job; enforcing it consistently across every employee is where HRMS software actually earns its place, since leave balances, approvals, and accrual rules are far harder to apply consistently on spreadsheets.
4. Prevention of Sexual Harassment
Sexual harassment remains a persistent issue in workplaces worldwide, highlighting the importance of HR policies to prevent such behaviour. Every company is obligated to take proactive measures to address and prevent sexual harassment through a well-defined policy framework.
Companies must adhere to the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013 (POSH Act), which aims to ensure a safe working environment for women. An Indian anti-sexual harassment policy should outline prohibited behaviours, establish an Internal Complaints Committee (ICC), and detail the redressal process under the Act.
A trend many similar blogs still miss: the Ministry of Corporate Affairs and Supreme Court directions have tightened scrutiny of the annual POSH compliance report that companies must file, and courts have continued to penalise organisations for not constituting a valid ICC or for delays in inquiry timelines. HR teams in 2026 are increasingly expected to keep dated, auditable records of ICC constitution, training sessions, and complaint timelines, not just a policy document sitting in the handbook.
Surveys continue to show that a significant share of women worldwide report experiencing workplace sexual harassment, reinforcing the urgent need for effective prevention and redressal mechanisms.
Creating a safe workplace environment not only promotes employee well-being but also enhances organisational productivity and reputation. However, crafting a comprehensive anti-sexual harassment policy requires careful consideration and legal expertise, so companies should seek legal counsel to ensure compliance with relevant laws and regulations.
Note: This is one of the most sensitive of all HR policies in India, so please take legal advice before finalising it for your organisation.
5. Gratuity and Employee Provident Fund (EPF)
Employee Provident Fund (EPF) and Gratuity play pivotal roles in ensuring employee financial security and well-being.
Gratuity: Under the Payment of Gratuity Act, 1972 (now largely subsumed into the Code on Social Security, 2020), a company must pay gratuity to eligible employees upon separation after completing the qualifying period of service. It provides a lump-sum payment upon retirement, resignation, or termination, based on length of service and last-drawn salary, and the maximum gratuity payable remains capped at ₹20 lakh. A key 2026 change: fixed-term employees are now entitled to gratuity on a pro-rata basis even if they haven’t completed the earlier continuous-service threshold, which most legacy HR policy documents in India still don’t reflect.
Employee Provident Fund (EPF): Widely regarded as one of the most beneficial HR policies in India for workers, EPF ensures long-term financial stability for employees. Enforced under the Employees’ Provident Funds Scheme, 1952, EPF mandates both employees and employers to contribute 12% of the employee’s basic monthly salary towards the fund. Employees can use their EPF savings for loans or withdraw funds after retirement, and EPF accounts accrue interest, adding to savings over time. EPFO has ratified the EPF interest rate for FY 2025-26 at 8.25% per annum, the third consecutive year at this level, benefiting more than 7 crore contributing members. EPFO’s ongoing “EPFO 3.0” digital reforms, including UPI-based withdrawals and faster claim settlement, are also changing how quickly employees can access their own EPF funds.
Overall, by implementing Gratuity and EPF policies correctly, companies demonstrate their commitment to employee welfare and financial stability, fostering a positive work environment and enhancing loyalty and retention. Policies around LWF, PT, TDS, and EPF only stay accurate if the underlying system keeps up with law changes, which is exactly what a payroll compliance management software is for, particularly with state-wise Labour Code rules still rolling out through 2026.
6. Learning and Development
Learning and Development (L&D) plays a vital role in organizational success in India. It focuses on employee training, career development, and performance management. L&D encompasses various opportunities to enhance employees’ skills and abilities, such as employee coaching, mentoring, succession planning, and organization development.
In India, HR policies on L&D are crucial for organizational success. A comprehensive L&D policy equips employees with the necessary skills and knowledge to perform their roles effectively. It enhances employee performance, engagement, and motivation, while reducing turnover and improving employer branding.
Key elements of an effective L&D policy include:
- Analysing organisational objectives and the skills required to achieve them.
- Designing engaging training materials suited to different learning styles.
- Providing mobile and AI-assisted micro-learning opportunities: short, on-demand modules delivered through apps have become the standard format for compliance and skills refreshers in Indian workplaces in 2025-26.
- Involving employees in the design and feedback of training programmes.
- Continuous review and revision to keep the policy relevant and effective.
By implementing a well-structured L&D policy, organisations in India can foster a skilled and engaged workforce, driving success and growth. Policies around leave, conduct, and L&D work best when tracked centrally, which is the kind of long-term workforce structuring that human capital management software is built for, especially as skill data increasingly feeds into internal mobility and succession decisions.
5 Benefits of HR Policies in India
Implementing comprehensive HR policies offers numerous advantages for both companies and prospective employees:
- Coherence and Structuring: HR policies ensure the consistency and proper structuring of company’s procedures. By detailing how policies should be applied, they leave no room for ambiguity or loose ends. According to a study by SHRM, corporations with well-defined HR policies experience 35% fewer procedural errors and inconsistencies.
- Flow and Transparency of Information: These policies enhance the flow and transparency of information within the corporation. By sharing policies with all employees, individuals are informed about their duties and obligations to the HR department. Research by Deloitte found that transparent communication about HR policies can increase employee engagement by up to 40%.
- Contribution to Employer Brand: HR policies play a crucial role in shaping employer brand and attracting top talent. Policies that align with labour-market expectations enhance reputation and support retention, and increasingly influence how AI answer engines summarise a company when candidates ask about it.
- Reduction of Complaints and Legal Problems: Well-defined HR policies reduce complaints, disputes, and legal issues by detailing requirements and conditions for specific situations, helping prevent misunderstandings and conflicts, and now, Labour Code non-compliance.
- Reflection of Company Culture and Vision: HR policies reflect the culture and vision of the company, providing a common frame of reference for all employees. Consequently, this fosters a sense of belonging and alignment with organisational values.
By embracing sound HR policies and procedures, companies can streamline operations, reduce risk, foster a positive work environment, and strengthen their competitive advantage. These policies serve as foundational pillars for organisational success, promoting transparency, fairness, and employee satisfaction.
How to Make HR Policies and Procedures?
- Conduct a Needs Assessment: Begin by assessing the specific needs and challenges of your company. Also, identify areas where policies and procedures are lacking or need improvement.
- Research Legal Requirements: Familiarise yourself with Indian labour laws, regulations, and industry standards. As of 2026, this means mapping every existing policy against the Code on Wages, Industrial Relations Code, Code on Social Security, and OSH Code, all effective since 21 November 2025, alongside relevant state-specific rules that continue to be notified throughout the year.
- Consult Stakeholders: Engage key stakeholders, including management, employees, legal advisors, and HR professionals, in the policy development process. Moreover, gather feedback and insights to ensure that policies reflect the needs and expectations of all stakeholders.
- Draft Policies and Procedures: Develop clear, concise, and comprehensive policies and procedures that address key areas such as recruitment, compensation, performance management, and employee relations. Ensure that policies are easily understandable and accessible to all employees.
- Review and Revise: Regularly review and update HR policies to reflect changes in laws, regulations, and organisational needs. Further, solicit feedback from employees and stakeholders to identify areas for improvement.
- Communicate and Train: Communicate new and revised policies to all employees through multiple channels, such as employee handbooks, intranet portals, and training sessions. Additionally, provide training and guidance on policy implementation and enforcement to ensure understanding and compliance. Research shows that companies with comprehensive training programs have 218% higher revenue per employee.
- Monitor and Evaluate: Establish mechanisms to monitor policy adherence and effectiveness. Track metrics such as employee satisfaction, turnover rates, and compliance incidents to gauge the impact of policies on organisational performance.
By following these steps, companies can develop and implement HR policies and procedures that promote compliance, fairness, and success, even as India’s regulatory landscape keeps shifting through 2026.
NYGGS HRMS Software: A Tool to Ensure Everyone Is Following HR Policies in India
NYGGS Human Resource Management Software plays an important role in ensuring that everyone follows HR policies. The system allows HR professionals to access essential data that is directly related to HR policies. Some of the information it provides are:
- The working hours of each employee
- The leave patterns of each employee
- Recruitment, training, compensation data, and much more
This cloud-based HRMS software is built to keep pace with the latest Indian labour laws, including the 2026 Labour Codes, so the HR department can stay compliant with statutes like LWF, Professional Tax (PT), TDS, and EPF without manually tracking every state notification.
In short, whether it’s a payroll compliance management software need for LWF, PT, TDS, and EPF, an HRMS software to enforce leave and conduct policy consistently, or human capital management software to structure L&D and workforce data long-term, NYGGS is committed to developing customised software that meets your HR policy needs in India. Do you have questions? We’ve got answers. Contact us today!
FAQs
What's new in HR policies in India for 2026?
The biggest change is India’s four Labour Codes, on Wages, Industrial Relations, Social Security, and Occupational Safety, becoming effective from 21 November 2025. Central and state rules are still rolling out through 2026, so most HR policy documents need a compliance review this year.
Are the new Labour Codes fully implemented across India in 2026?
Not fully. The Codes are legally in force, but central and state rules are still being finalised state by state. Employers should treat 2026 as a transition year and keep a state-wise compliance tracker rather than assuming uniform enforcement.
What is the current EPF interest rate for FY 2025-26?
EPFO has ratified the EPF interest rate for FY 2025-26 at 8.25% per annum, unchanged for a third consecutive year, benefiting over 7 crore contributing members once credited to member accounts.
Does gratuity still require five years of continuous service in 2026?
For fixed-term employees, no. Under the Code on Social Security, fixed-term employees now get gratuity on a pro-rata basis regardless of tenure, a change many older HR policies in India still don’t reflect.
What should a POSH policy include to stay compliant in 2026?
A valid Internal Complaints Committee, defined redressal timelines, mandatory awareness training, and dated records for the annual POSH compliance filing. Regulators have increasingly scrutinised ICC constitution and inquiry delays.
How is AI changing HR policy enforcement in Indian companies?
AI is used both to enforce policy, flagging leave or attendance anomalies, and to require new policy, such as rules on using generative AI tools with confidential data. Codes of conduct in 2026 increasingly address both.
How does HRMS software help enforce HR policies consistently?
Writing a policy is only half the job; HRMS software applies leave, attendance, and conduct rules the same way for every employee, and keeps an audit trail HR can rely on during disputes or inspections.
Why do LWF, PT, TDS, and EPF need dedicated compliance software?
Because these rules change by state and by year, and now by Labour Code rollout stage too. Payroll compliance management software updates automatically as laws change, reducing the risk of manual payroll errors.
How does human capital management software support long-term HR policy?
Leave, conduct, and L&D data mean more when tracked centrally over an employee’s tenure. Human capital management software is built for exactly that kind of long-term workforce structuring, feeding into succession and retention decisions.