01
Introduction & How to Use
Why you need written policies, how to customise the handbook for your business, and a step-by-step setup guide.
HR Policy Handbook Template for Small Businesses
A complete, customisable HR policy document for Indian SMEs. 10 chapters covering everything from employment terms and leave policy to POSH compliance and exit procedures. Edit it, print it, hand it to every employee on Day 1. Updated June 2026.
- 10 ready-to-use policy chapters covering every essential HR topic
- Covers PF, ESI, POSH, Maternity, Gratuity, and all major labour laws
- Customisable for any industry: restaurant, retail, manufacturing, healthcare, or office
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Petpooja presents
HR Policy Handbook Template
For Indian Small Businesses
10
Chapters · PDF template
FY 2025-26
What's Inside
10 policy chapters ready to customise and print.
02
Company Overview & Culture
Template section for your company details, mission statement, and core values. Fill in your specifics.
03
Employment Terms & Probation
Hiring categories, probation periods, notice periods, and confirmation process. Compliant with the Shops & Establishments Act.
04
Working Hours & Attendance
Standard hours, shift timings, overtime at 2x rate (Factories Act), late-arrival policy, and attendance tracking methods.
05
Leave Policy
Earned leave, casual leave, sick leave, maternity (26 weeks), paternity, and national holidays. State-wise minimums noted.
06
Compensation & Benefits
Salary structure, PF (12%) and ESI (0.75%/3.25%) breakup, Professional Tax, TDS, gratuity provision, and payslip rules.
07
Code of Conduct
Workplace behaviour rules, dress code by industry, mobile phone and social media policy, and a 4-step disciplinary process.
08
POSH Policy
Complete Sexual Harassment policy per the 2013 Act. Internal Committee setup, complaint process, and penalty information.
09
Grievance Redressal
4-step escalation process for workplace concerns. No-retaliation guarantee, confidentiality rules, and resolution timelines.
10
Separation & Exit
Resignation, termination, absconding policy. 10-item exit checklist and full & final settlement calculation guide.
Why This Matters
Why Every Small Business Needs a Written HR Policy
Most Indian SMEs run HR on verbal agreements. "We'll give you 12 leaves." "Notice period is one month." "Salary comes by the 7th." It all works fine until one day it doesn't.
Think about what happens when there's no written leave policy. Every leave request turns into a negotiation. One manager approves 3 days for a wedding. Another says no. The employee who got rejected talks to the one who didn't, and now you've got a fairness problem on your hands. A two-paragraph leave policy in a handbook would've prevented the whole thing.
Here's something that catches many business owners off guard. The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 applies to ALL employers, not just large companies. If you have 10 or more employees, you must constitute an Internal Committee. The fine for non-compliance? Up to ₹50,000 for the first offence under Section 26. Repeated violations can lead to cancellation of your business licence.
Exit procedures are another common pain point. Without a documented notice period, F&F timeline, and asset recovery process, departing employees become disputes. Who owes what? When does the final settlement happen? What about the company laptop? These questions shouldn't need a phone call to the owner every single time.
A written HR policy handbook protects both sides. The employer has documented proof of what was communicated. The employee knows exactly what to expect. No grey areas, no "but I was told something different." You print it, hand it over on Day 1, get an acknowledgment signature, and you're covered.
Sample Preview
What the handbook covers for a typical small business.
Here's a snapshot of sample clauses from the template. All values in brackets are customisable to match your business:
Probation period (example): [3/6] months, with [7/15]-day notice during probation. Confirmation subject to performance review by reporting manager.
Earned leave (example): [15-21] days per year, carry forward up to [30-45] days. Encashment of unused balance at the time of exit.
Maternity leave: 26 weeks for first two children, as mandated by the Maternity Benefit (Amendment) Act, 2017. This is a statutory minimum, not customisable.
PF contribution: 12% of Basic from both employer and employee, per the EPF Act, 1952. Statutory rate, applies to all covered establishments.
POSH Internal Committee: Composition requirements, 90-day inquiry timeline, and redressal process per the POSH Act 2013.
Exit process (example): [30/60]-day notice period for confirmed employees. Full and final settlement within 30 days of last working day.
These are just 6 sample clauses. The full handbook covers all 10 chapters shown above, with 50+ ready-to-edit policy clauses.
Key Stats
Why written HR policies matter.
10+
labour laws apply to any Indian business with even 5-10 employees. PF, ESI, POSH, Bonus, Gratuity, Shops & Establishments. Each one has documentation requirements.
Source: Ministry of Labour & Employment (EPF Act, ESI Act, POSH Act, Payment of Bonus Act, Payment of Gratuity Act, S&E Acts)₹50,000
fine for first POSH non-compliance offence. Repeated violations can lead to business licence cancellation. Most small businesses don't even know this applies to them.
Source: Sexual Harassment of Women at Workplace Act, 2013, Section 2626 weeks
of paid maternity leave mandated for the first two children. Denial is a criminal offence under the law. Your handbook needs a clear maternity policy.
Source: Maternity Benefit (Amendment) Act, 2017
Common Mistakes
5 HR Policy Mistakes Small Businesses Make
01
Running HR on verbal agreements
No written proof of notice period, leave policy, or salary structure. Every dispute becomes he-said-she-said. In a labour court, verbal promises carry almost no weight.
02
No POSH Internal Committee
Mandatory for any workplace with 10 or more employees under Section 4 of the POSH Act, 2013. Most small businesses don't know this requirement exists until an incident happens.
03
Not issuing appointment letters
The Shops & Establishments Act requires written employment terms. Without an appointment letter, the employee can claim any terms they want. And you'll have no documented proof to counter it.
04
No documented leave policy
"We give leaves when needed" isn't a policy. It leads to favouritism complaints and inconsistent approvals. One employee gets 3 days for a family event, another gets told no. That's how trust breaks down.
05
Skipping the exit process
No handover checklist, no asset recovery, no F&F timeline. The employee leaves, takes company data, and demands settlement months later. A simple documented exit process prevents all of this.
Comparison
Without HR Handbook vs With This Template.
| Aspect | Without HR Handbook | With This Template |
|---|---|---|
| Leave disputes | "I was promised 20 days" vs "We give 12" | Written policy, signed acknowledgment |
| POSH compliance | No IC, no policy, ₹50,000 fine risk | Complete POSH section ready to implement |
| Employee onboarding | Verbal explanation of rules | Hand over handbook on Day 1 |
| Exit & F&F | Disputes, delayed settlements | Documented process, clear checklist |
| Legal protection | Zero documentation in labour court | Written, signed policies as evidence |
Stop running HR on verbal agreements.
Download the free HR Policy Handbook and give every employee clear, written policies from Day 1.
FAQ
Frequently asked questions.
Is this handbook legally valid?
This is a template for reference. While it follows Indian labour laws, you should get it reviewed by a legal advisor before implementation. Labour laws vary by state, so customise the state-specific sections (Professional Tax, Shops & Establishments, minimum wages) for your location.
Which industries can use this handbook?
Any industry. The template is designed for Indian SMEs across restaurants, retail, manufacturing, healthcare, salons, education, and offices. Simply edit the industry-specific sections (dress code, shift timings, overtime rules) to match your business.
Does this cover the POSH Act requirements?
Yes. Chapter 8 includes the complete POSH policy framework: what constitutes sexual harassment, Internal Committee composition requirements (mandatory for 10+ employees under Section 4), the complaint and inquiry process, and penalty information (up to ₹50,000 fine under Section 26).
How many employees do I need before I need an HR handbook?
There's no legal minimum, but practically, once you have 5+ employees, written policies prevent confusion and disputes. Legally, certain policies become mandatory at specific thresholds: POSH Internal Committee at 10 employees, PF at 20 employees.
Can I edit this template?
Absolutely. That's the point. Every section has placeholder values in [brackets] that you should replace with your company's specific policies. Adjust leave days, notice periods, probation duration, and shift timings to match your reality. For salary breakup numbers, the free CTC calculator gives you the exact PF, ESI, and take-home split.
About Petpooja
Petpooja is India's leading SME business software suite, trusted by 1,50,000+ businesses across restaurants, retail, healthcare, manufacturing, and more. From billing and payroll to task management and procurement, Petpooja helps Indian businesses run better, every day.
Automate your HR policies with real systems
Petpooja Payroll handles attendance tracking, leave management, PF/ESI calculations, payslip generation, and full & final settlements. Biometric hardware included. Setup in 3-5 days.
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