30, How does an organisation understand what is the legal framework and which statutory directions it is supposed to follow

The newsletter on Human Resource expert opinion, for the Indian context

Complying to laws in an organisation is a very interesting aspect because that is one of the key expectations from a leader, that you, as an organisation should be compliant. We don't want to be a legally non-compliant organization.

So let's spend a little time trying to understand what kind of a compliance system do we have. It's somewhat standard globally.

So we have something called as an Act.

An Act means certain instructions, the Parliament discusses, and once they discuss, they figure out, this is what we are going to do. And then it is passed by the Parliament. Once it is passed by the Parliament, it goes to the President, and the President gives it an asset that yes, I approve it, which means the President signs it.

Once that is signed, it is released to the public by way of a gazette, which means the official newspaper of the government. Once that is done, it is assumed that the law is in force.

However, a lot of times, it also adds up one more specific thing, which says even though the law is approved by the authorities, which means the respective people, it will be effective from the date on which the government notifies, which is what has happened to the four labor codes.

The laws are passed, laws are ready, we are aware that this is what the law will do. But, there is this one little thing left, which says that on the day the government says that it is effective this date, only from that day the laws will be applicable. Till such date, the laws are not applicable. They are ready. They are there. But right now, nobody can be checked on those laws.

We cannot say that I am going to be behaving as per those laws, and I'm going to be checking organisations as per those laws. So that's called the effective date, or also from the date on which it is notified.

But for the act to be applicable, you also need certain finer details. And those finer details are what we call as rules. Rules meaning that at the macro level, this is what the law says, the specifics come in the rules. So we combine an act and then we have the rules.

This forms the law.

Now, what also happens as time progresses, the government realises that the rules which were taken out require a lot of further clarifications, require more detailed information. So we come out with further notifications.

And sometimes the laws actually want that you will keep notifying this from time to time, which are called as notifications.

For example, the Minimum Wages Act requires that the respective authorities have to declare that what is going to be the minimum wage. Once in six months, once a year, depending on each of the states, they declare that, which means it is not something that people are changing. It just that means that you need to inform, and that information comes out by way of notification.

So for an organisation, we need to follow the act. We need to follow the rules, and we need to follow the notifications.

So for an organisation, we need to follow the act. We need to follow the rules, and we need to follow the notifications.

These are all for us as an organisation, something which has to be done. It's not a choice that if it's in the act, I will do it, but if it's the rules, I will choose not to follow it. Or if it's a notification, I can think whether I want to follow or I don't want to follow.

For us, all three are applicable.

Now, all these three can also come from two different sources.

One source called the center. Center meaning the Government of India, and second is state. State meaning that the specific province or the specific state we have, what we call as the state of Haryana, the state of Punjab, the state of Maharashtra. Like this, we have a lot of states in which we have bifurcated the boundary of India or the geography of India.

So each state would have their own law also. Like the Shops and Establishment Act is a state act. So every state will have their own act. Whereas, a factories act is a central act, which means the Government of India comes out, and all the factories across any state follow that.

So then we have the next topic, which is that when you have these acts, these rules and the notifications, there is a possibility that there is a disagreement between how the authorities interpret the act and how the person who's being enforced to follow these acts as a citizen who's interpreting the act. As a result of which, these things get into the courts.

Now, whether it goes to the High Court or the Supreme Court or the Sessions Court, it goes to the court. Once they go into the court, the court can also give an order. Once the court gives an order, that also becomes enforceable on us as an organisation, which specifically means that if a High Court gives an order, then every organisation within that state will need to follow that order.

Other states may not follow that order. That's a choice they have. Whereas if a Sessions Court gives an order, it's not necessary for every organisation to follow that. But a High Court, it means it's a mandatory, it's sort of a law, not sort of, it's actually a law.

You need to follow that because if you don't follow that, it's a activity you're doing, which is considered illegal.

So they create that law as a result of, what we call as a litigation.

Similarly, sometimes these cases or sometimes the disagreements or litigation go to the Supreme Court. Once they go to the Supreme Court, and whatever is passed by the Supreme Court, that also becomes a law. That needs to be followed by everybody.

But the only difference being, if it's an order passed by the Supreme Court, then it needs to be followed by every organisation within this country. We cannot then say that the case was initiated in the state of Tamil Nadu, and the High Court of Tamil Nadu heard that case. But yes, if that case went into the Supreme Court, and the Supreme Court decided in a particular manner, then every person across all the states in India will need to follow that.

So, this is the method of being aware of what is a law.

What is it that I need to follow?

Following an act is fairly simple, because all one needs to do is, do a Google search, you will get the act. Following rules is also somewhat similar, because you will normally have all the acts being supported by the rules on the main sites of the central or state Governments.

As soon as you get into the notifications, and what we call as the orders of the court, the term used for that is case laws, you get a little complex. And once those complexities come, it is always advisable to use a practitioner.

Depending on what kind of an issue you are involved in, you should use either a legal practitioner, or you should use a HR practitioner to be able to assist you in terms of telling you what is the best way of dealing with this situation.

So if you had to create a group of policies and HR policies, an HR practitioner is the best one. Whereas if you need to do certain filings in the court, in terms of certain litigation with the court, or you have a conflict with the employees, then it is always beneficial to engage a legal practitioner.

If you are one of those lucky organization who can afford both a legal practitioner and an HR practitioner, then it is going to give you a very strong way of managing your organisation.

But if you are not, then you need to figure out under which situations you need to use an HR practitioner and under which situations you need to use an HR legal practitioner.

India HR Guide is aimed at discussing and shedding light on aspects in a crisp manner that organisations in India follow in the area of Human Resources. It is aimed at CEO's, MD's and line managers to understand how various aspects of Human Resources can help shape their organisations journey in India. Our industry leading expert, Mandeep Singh, offers years of accumulated knowledge from having advised clients across sectors, and spread across the remotest corner of the country. Let's make the workplace, a better place.

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