74th HR Kurakani deliberates on HR Audit and its process Insights

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Real Solutions Pvt Ltd organised 74th HR Kurakani on 26th of December on the key topic ‘HR Audit: Process Insights. The session was attended by numerous HR professionals from various organizations in Nepal and was moderated by reputed practitioner of HR - Mr.Bishal Dahal.

The Labor Act 2017 ("Labor Act") under Section 100 has envisaged the requirement of conducting Labor Audit by all Enterprises. Pursuant to Rule 56 of the Labor Rules, the Enterprises are required to conduct Labor Audit by the end of Nepali Month of Poush (Mid-January) every year. The Labor Audit should be conducted as per the criteria defined by the Ministry of Labor. Using the power conferred by Rule 56, the Ministry of Labor, Employment and Social Security has issued the Labor Audit Standard 2018 ("Labor Audit Standard" or "Standard"). The Labor Audit Standard has come into implementation effective from November 22, 2018.

Starting the session with brief introduction, Mr Dahal said “A human resource audit usually involves review of all HR policies, practices and procedures whether or not they are formal.” Further elaborating he said, HR audits helps organization to determine whether human capital is effectively used, where human capital is incorrectly – or unlawfully — used, and how to improve human capital return on investment. It includes reviewing documents, interviewing human resources professionals from different areas of the organization, interviewing some manager at different level of the organization, and possibly interviewing in-house employment counsel. 

Addressing the current labour act of 2075, they shared that it is mandatory for employers to conduct HR audit by the end of the month of Poush every year as per the criteria defined by Ministry of Labor.

The participants at the Kurakani took to discussing each of the activities mention in the Format of Labor Audit Report that has been provided under Schedule 10 of Labor Rules in detail and agreed that their implementation would be somehow beneficial.

1. Description of the workforce

2. Compliance report of Labor Act – 2074 and Labor Rule 2075

  • Stipulate if all employees/ worker shall be offered Contract or Appointment letter pursuantto the Section 11 of act. If such letter has not been provided articulate the reason.
  • Stipulate if provision of Schedule- 6 of Act Schedule- 3 of rule shall be adhere while non-Nepalese Citizen employee/worker was appointed. If such approval of the Department of Labor has not been provided articulate the reason.
  • Stipulate if minor worker (less than 18 years) had been deployed in the work/production along with description of working condition.
  • Stipulate if provision of Section- 16 and Section – 17 of shall be adhered while Trainee has been deployed in the work.
  • Stipulate if provision of Section -18 of Act shall be adhered that salary of other facility has been awarded while Apprentice has been deployed in the work.
  • Stipulate if as per provision of Schedule- 5 of Act that facility and social security has been awarded while part Time Worker/Employee has been deployed in the work.
  • Stipulate as per provision of Section- 28 of Act that if worker/Employee has been deployed only 8 hours a day/ 48 hours a week in the work.
  • Stipulate as per provision of Section -31 of Act that if Worker/Employee has been provided 30 minutes rest after 5 hours of work; and if over time has been provided for extra work.
  • Stipulate as per provision of Section 33 of Act that female worker/Employee has been provided transportation facility while they are working after dusk and before sunrise.
  • If worker/employee has been given less than based salary as per provision.
  • Articulate monthly average base salary (Average figure of basic salary, allowances, incentive and facilities)
  • Stipulate as per provision of Section- 36 of Act that if annual increment/grade has been awarded to the worker/employee.
  • Detail that if salary has been disburse more than one-month gap. (if yes state the reason)
  • Stipulate whether worker/employee has been provided a Festive Bonus as per provision of Section 37 of Act.
  • Stipulate whether worker/employee has been provided following leave as per provision of schedule – 9 of Act (specify the number or days- Weekly day off/Public Holiday/Home Leave/Sick Leave/Maternity Leave/Paternity Leave/Obsequies Leave/ Substitute Leave)
  • Note that Enterprise whether deposit provident fund and social security fund according to Section- 52. If money is not deposited disclose how it is provisioned or uses.
  • Note that Enterprise whether deposit Gratuity and Social Security Fund according to Section -53. If money is not deposited disclose how it is provisioned or uses.
  • As per provision of Section -54 of act specify that whether medical insurance is arranged or not.
  • As per provision of Section-55 of Act Specify that whether all types of accident is covered or not.
  • Verify that if outsource worker/employee is working or not. Specify the permit number and date of such outsourcing company. Also verify that whether worker and employee are given pay and perk as well as if timely monitoring from the concern department has been done according to Section- 59 of act.
  • Specify that if Health and Safety policy is adopted or not as per provision of Section -68 of Act.
  • According to Section – 74 of Act, verify whether Health and Safety Committee has been form and meet accordingly.
  • According to Section – 108 of act, verify whether Internal Management By-laws in instigated or not.
  • Specify that whether by law is distributed to worker/employee. Also verify if same is correspond to the labor office.
  • According to Section- 111 of act, verify whether Labor Relation Committee is formed and meet accordingly. State last meeting date within the said fiscal year.
  • According to Section -112 of Act, verify whether Performance Appraisal system has been introduced or not.
  • According to Section -113 of act, verify whether individual claim is put forward to the management and how many were resolved.
  • Specify if, collective bargaining is conducted this fiscal year.
  • Specify with date if collective bargaining has been done. Also, state that if bargaining is still going on or in the meantime, if strike or lockout or any other event was occurred.
  • State with date that if any of agreement or decision are yet to be executed from the outcome of Collective Bargaining. If yet to be come into force then state the due date that is going to be happen.

3. Provision related to the Define Contribution Social Security of Act 2074 and the Define Contribution Social Security Rule – 2074

  • State if Enterprise is register with Social Security Fund or not.
  • State if money is deposited in Social Security Fund or not.

4.  Provision related to the Bonus Act – 2030 and Bonus Rule 2039

  • Whether Enterprise fall under the purview of Bonus Act in order to distributing Bonus to it Employee/Worker
  • If Enterprise is fall under the purview of Bonus Act, describe if Bonus is distributed according to the provision.
  • Remark if last fiscal year statutory bonus is yet to distribute.

5. Provision related to Trade Union Act- 2049 and Trade Union Rule 2050

  • Articulate if Trade Union is register and functional?
  • Articulate if Trade Union’s election has been conducted?

6. Any other matter that Enterprise would like to supplement

  • Articulate whether Occupational Health and Safety policy is adopted. And if any independent mechanism is arranged for its audit.

In additions, auditor can also mentions points he would like to purpose for betterment. The name and signature of the person filling up the form and the one who approves the report is mandatory.

During the discussion on harassment, HR Practitioner said that it can be a trying and disappointing time when an employee files a complaint of harassment or bullying. HR needs to get into action mode immediately in such cases, they added. Professional also noted that Health and safety standard differs according to the nature of organization. They agreed that Health & safety policy of Construction Company might not align with organization like telecommunication and hence it differs on nature of job as well.

Addressing the current scenario, participants in the Kurakani shared that when country has moved to provinces, Local body has the authority to make laws which can be more challenging in the upcoming days to the professionals.

At the Kurakani, distinguished speakers addressed that all the HR professional are not from the legal background but there are numerous laws and regulations governing the employment relationship and HR professionals must understand and navigate in order to help ensure their organizations avoid costly fines and other penalties, including the potential harm to the organization’s reputation.

Glimpses of the Event:

If you require any further assistance in regard to HR auditing, you can contact Real Solutions Pvt Ltd at +977-1-4106706/4106708. 

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