HR Policies in India: 20 Must-Haves for 2026

Which HR policies does a company in India actually need in 2026?

We have helped over 300 global companies hire, pay, and manage more than 2,000 employees in India without setting up a local business entity. The answer is always the same: seven policies are required by law, and about 13 more keep you out of disputes as you grow.

Below are both lists, the laws behind them, the 2026 changes, penalties and a rollout plan, building on our guide to HR compliance in India.

What are HR policies in India?

HR policies in India are the documented rules that govern how a company hires, pays, schedules, protects and exits its employees. They turn the central Labour Codes and state laws into daily practice, set out what each side owes, and give you written proof of compliance when an inspector or a labour court asks.

From our experience, a documented policy set gives you three things:

• Legal protection: your policies are the first document an inspector requests, and they must match both central law and your state's rules.
• Consistency: the same rules apply to every team and location, which reduces bias claims and helps retention.
• Decisions that hold up: managers stop improvising on leave, overtime or exits, so their calls survive a later challenge.

Each of these depends on the legal base underneath. Refer this guide to know more about statutory compliance in HR in India.

Which laws govern HR policies in India?

There is no single "HR Act" in India. HR policies rest on four central Labour Codes, in force since November 21, 2025, plus standalone laws such as the POSH Act 2013 and the Digital Personal Data Protection (DPDP) Act 2023. State Shops and Establishments rules then add local thresholds, forms and timelines.

The four Codes replaced 29 older central labour laws, and each one drives a different set of policies:

• Code on Wages, 2019: minimum wages, the 50% wage definition, pay dates and statutory bonus.
• Industrial Relations Code, 2020: standing orders, grievance committees, layoffs and retrenchment.
• Code on Social Security, 2020: provident fund, ESI health insurance, gratuity, maternity benefit and gig workers.
• Occupational Safety, Health and Working Conditions (OSH) Code, 2020: appointment letters, working hours, leave, safety and welfare.

The Ministry of Labour and Employment notified the Central Rules under all four Codes in May 2026. Those rules bind central-sphere establishments; most private offices follow their own state's rules, and many states are still in draft.

Our guide to the new labour codes in India tracks that rollout, and our playbook on labor laws in India maps each Code to employer duties. Because the state layer varies, a policy can pass an audit in Bengaluru and fail one in Pune.

Which HR policies are mandatory in India?

Seven HR policies are mandatory in India: an appointment letter, a wages policy, working hours and overtime, statutory leave, a POSH policy, a grievance redressal mechanism, and health and safety. Several switch on at a specific headcount.

The table shows the law behind each one and when it applies.

The thresholds are headcount-based, so a growing team picks up new duties without any change in revenue. If you are eager to see what changes at 10 staff, our statutory compliance checklist after 10 employees walks through it.

1. Appointment letter or employment contract

Every worker must get a written appointment letter before joining, whether permanent, fixed-term or contract, and regardless of company size. It should record the role, pay, working hours, notice period and termination terms.

Labour Minister Mansukh Mandaviya put it plainly in the Lok Sabha on February 12, 2026: “To every such youth who will get a job, an appointment letter must be given under all circumstances.” See what else belongs in an employment agreement in India.

2. Wages and salary policy

A wages policy covers minimum wages, pay dates, payslips and lawful deductions. Monthly wages must be paid by the 7th of the following month and can never fall below the state minimum wage for the role.

The biggest change is the 50% rule. Under the Code on Wages, basic pay plus dearness allowance must make up at least half of total pay, which raises provident fund and gratuity costs for low-basic structures. Rework your salary structure in India before the next revision.

3. Working hours and overtime policy

The standard is 8 hours a day and 48 hours a week, with overtime paid at twice the ordinary wage rate. In central-sphere establishments, overtime is capped at 144 hours a quarter under the OSH Central Rules 2026.

State-sphere offices stay on their state's existing cap until new rules land, and Telangana, Maharashtra and Haryana now allow a 10-hour day within the 48-hour week. Our guide to overtime laws in India tracks both.

4. Statutory leave policy

A leave policy sets earned leave, sick and casual leave, public holidays and maternity leave. Earned leave accrues at one day for every 20 days worked once an employee has worked 180 days in a year, while casual and sick leave follow state rules.

Women get 26 weeks of paid maternity leave in India for the first two children and 12 weeks after that. For state-by-state entitlements, see this guide to leave policy laws and holidays in India.

5. POSH policy

The POSH Act 2013 requires every employer with 10 or more employees to form an Internal Committee, publish a complaint process, finish inquiries within 90 days and file an annual report. Smaller workplaces fall under the district's Local Committee.

Registering the committee on the government's SHe-Box portal is recommended, and the policy should cover virtual complaints from video calls. If you hire through a partner, check whether your EOR handles POSH and the Shops and Establishments Act.

6. Grievance redressal policy

Establishments with 20 or more workers must set up a Grievance Redressal Committee under the Industrial Relations Code, with equal employer and worker members. It must settle complaints within 30 days, so write the route and escalation steps into the policy.

7. Health and safety policy

The OSH Code sets duties on safe premises, drinking water, sanitation, first aid and emergency plans. Offices are not exempt: establishments with 10 or more workers are in scope, and a crèche is required once you reach 50 employees.

Get these seven right first, because everything else in your handbook builds on them.

What other HR policies should companies in India have?

Beyond the mandatory seven, most companies in India document about 13 more policies as they grow. They are not all legally required, but they keep decisions consistent and exits predictable.

These are the ones we see in almost every well-run team:

1. Code of conduct and ethics: behaviour standards, conflicts of interest, gifts and anti-bribery rules.
2. Equal opportunity: protection across gender, caste, religion and disability, including reasonable accommodation.
3. Recruitment and background verification: how roles are approved, offers made and background checks in India run lawfully.
4. Probation and confirmation: probation length, review points and what confirmation changes.
5. Attendance and timekeeping: schedules, late marks and how attendance feeds payroll.
6. Compensation and benefits: pay bands, bonus, provident fund, ESI, gratuity and health cover.
7. Performance management: review cycles, ratings and a fair improvement plan.
8. Disciplinary procedure: warnings, show-cause notices and a hearing before any dismissal.
9. Data privacy and IT use: how employee data is collected, stored and deleted under the DPDP Act for employers.
10. Remote and hybrid work: eligibility, equipment, security and reimbursements, as set out in our work from home policy guide.
11. Confidentiality, IP and moonlighting: invention assignment, outside work and non-disclosure.
12. Travel and expenses: eligible spend, approvals and settlement timelines.
13. Resignation and exit: notice period rules, handover, asset return and full and final settlement.

Add whistleblower, social media and inclusive leave policies, such as bereavement, menstrual or pregnancy-loss leave, when they fit your workforce rather than copying a template.

What changed for HR policies in India in 2026?

Four things changed in 2026: the Labour Code Central Rules were notified, the EPF wage ceiling rose, the DPDP countdown began, and the courts widened key entitlements. If your policies were written before 2026, they almost certainly cite repealed Acts.

Here are the updates to build in, as of September 2026:

• Central Rules notified (May 2026): set formats for appointment letters, payslips and registers, plus the 144-hour quarterly overtime cap for central-sphere establishments.
• Old Acts formally repealed: the Industrial Relations Code (Amendment) Act, 2026 confirmed the repeal of the Industrial Disputes Act 1947, the Standing Orders Act 1946 and the Trade Unions Act 1926.
• State rules still landing: Gujarat, Bihar and Arunachal Pradesh have final rules under all four Codes; most others are partial or in draft.
• EPF wage ceiling raised (September 2026): the ceiling rose from ₹15,000 to ₹25,000 a month from September 17, the first revision since 2014.
• DPDP Rules countdown: the DPDP Rules were notified on November 13, 2025, and most duties apply from May 13, 2027. HR needs a privacy notice, retention rules and breach reporting.
• Adoption leave widened (March 2026): the Supreme Court struck down the limit that gave adoption leave only for children under three months.
• Gratuity for fixed-term staff: employees on fixed-term contracts in India now qualify for gratuity after one year, against five years for permanent staff.

Cite each rule by its Code, not the old Act name, because a policy quoting a repealed section invites a challenge.

What should an HR policy manual in India include?

An HR policy manual in India is one controlled document that holds every policy, its version date and each employee's signed acknowledgement. Auditors and labour courts review the manual, not scattered emails, so structure each policy the same way:

• Purpose and scope: why the policy exists and who it covers.
• Policy statement and definitions: the rule itself, with terms like worker and fixed-term employee defined as the Codes define them.
• Procedure: the steps, owners and timelines.
• Legal reference: the Code or state rule the policy satisfies.
• Version and acknowledgement: approval date, revision history and employee sign-off.

Date every revision, and review the manual at least once a year and again whenever a law changes.

How do you create and implement HR policies in India?

Having onboarded more than 2,000 employees for 300+ global companies, we have found policy work lands best as a sequence rather than a scramble:

1. Map the law: list the central and state duties for each location.
2. Fit it to your business: match each policy to your headcount, roles and work model.
3. Draft in plain language: use one structure and short sentences.
4. Review and approve: counsel checks enforceability, and leadership signs off.
5. Communicate and train: publish on the intranet, brief managers and cover it at onboarding.
6. Collect acknowledgement: get a signed or digital confirmation from every employee.
7. Review regularly: audit once a year and after every legal change.

Onboarding is where most of this becomes real. Our employee onboarding checklist for India lists the documents to have ready before day one.

What are the penalties for HR policy non-compliance in India?

Penalties in India range from fines to prosecution and apply per contravention. Missing POSH committees and late provident fund deposits are the gaps we see most often.

These are the statutory maximums that matter most for a policy set:

A professional policy review costs far less than one of these penalties. This information is general guidance as of September 2026, so consult legal counsel for your specific situation.

What HR policy mistakes do foreign companies make in India?

The most common mistake is copying a US or UK handbook into India. Several standard clauses have no legal footing here and fail the first time they are tested:

• At-will employment: Indian law expects a valid reason and due process before dismissal, so learn how to terminate an employee in India properly.
• Short notice periods: a two-week clause rarely matches Indian practice, where 30 to 90 days is common.
• Low-basic pay structures: keeping basic at 30% to 40% of pay now breaches the 50% wage rule.
• One national policy: it ignores state leave, working hours and registration rules.

Localize the parent handbook rather than copying it, and most of these disputes never start.

How can Wisemonk help you build compliant HR policies in India?

Wisemonk is an India-native EOR. We become the legal employer for your team in India, so you can hire, pay, and manage people without setting up a local entity, while we carry the policies and filings behind them:

• Hiring and onboarding: we source and screen candidates, issue compliant offer and appointment letters, run background checks and complete joining documents before day one. Read more in our guide on how to hire employees in India through an EOR.
• Payroll: we run monthly payroll in rupees, apply the 50% wage rule, deduct income tax, and issue payslips and year-end tax forms on time. See this guide to fully managed payroll in India.
• Benefits administration: we enroll employees in health insurance, manage provident fund, ESI and gratuity, and set leave and benefits plans that match market norms. See our guide to employee benefits in India.
• Statutory compliance: we draft and maintain your mandatory policies, set up POSH and grievance committees, and track central and state rules as they change. Read more about PF, ESI and gratuity compliance.
• Contractor management: we pay contractors compliantly and convert them to employees when the work starts to look like employment. See this guide to contractor misclassification risk in India.

Refer our blogs for more details. If you are interested to know your monthly filing dates, see our India payroll deadlines calendar.

We have built a strong India EOR practice. We handle employment contracts, payroll, PF, ESI, gratuity, and state-level compliance ourselves, and we are planning to move into future markets including the US and the UK.

What do clients say about working with Wisemonk?

Here is how two clients describe handing their India HR, payroll and benefits to us:

“We came across Wisemonk and met with the CEO and staff to explain our situation, and were very impressed with their customer-focused approach to their business. Wisemonk onboarded all of my employees in one or two days. They paid my employees' salaries on the day after my payment cleared. Needless to say, my employees and I were very satisfied with their service then and remain so over a year later. We are an American company, so I was very happy to see that they have a US bank account where I can make ACH payments to minimize bank charges. All salary payments are timely. They worked directly with my employees to enroll them in the health care program and explain any coverage-related issues. The best part is that we get to work with a dedicated person assigned to our company. I would highly recommend Wisemonk and think of them as our Indian HR department.”
- Frank Menes, Founder & CEO, Senem RFP

“Red Hill Technology Solutions has run its India engineering team on Wisemonk for the past year and a half. They handle payroll and benefits end to end, so I can offer my employees good health insurance without having to master the idiosyncrasies of Indian benefits myself. Payroll cutoff reminders arrive every month before I need them, and off-cycle bonus runs have never been a problem. Even equipment purchasing, a real headache for a US company shipping to Indian addresses, is as simple as telling them what I need. Exchange rates are fair and the pricing is transparent.

Deepika Elumalai, our point of contact, ties it all together. Whatever comes up, she pulls in the right people and sees it through. For any US company building a team in India, Wisemonk is an easy recommendation.”
- Tak Yamamoto, President, Red Hill Technology Solutions, Inc.

Both describe the same result: an India team that runs on time without the founder learning local HR rules.