HR Policies for Startups in India: 2026 Guide

Updated 2 September 2026

Which HR policies does an Indian startup actually need?

A 5-100 employee startup in India needs 9-12 core HR policies: appointment letters, leave, code of conduct, attendance, compensation, POSH (mandatory at 10+ employees), IT/data use, grievance redressal, and exit. Which ones are legally mandatory versus best-practice depends on your headcount and state.

Founders rarely get this wrong out of carelessness. They get it wrong because nobody tells them the order things become mandatory. This guide covers what you need, when it becomes legally relevant, and how to sequence it. To start from a working document instead, grab the Startup HR Policy Pack.

The 9-12 must-have HR policies for a growing Indian startup

1Appointment letter and employment agreement

The legal anchor for the employment relationship: role, pay, probation, notice and termination terms.

MandatoryDay one, employee one. No headcount threshold.

2Code of conduct

Behaviour, conflicts of interest, confidentiality and the disciplinary process.

Best practiceFrom day one; necessary once more than one manager makes judgment calls.

3Leave policy

Casual, sick and earned leave, and how it accrues. State minimums vary, so national templates fall short.

MandatoryUnder state Shops & Establishment registration, from your first office or employee.

4Attendance and remote/hybrid work

Working hours, core hours, late-marking and work-from-home eligibility.

Best practiceTighten well before you reach the Standing Orders threshold under the Industrial Relations Code.

5Compensation and payroll

Salary structure, pay cycle, deductions and increments, built around the 50% wage floor.

MandatoryFrom your first payroll run. The 50% wage floor applies at any size.

6POSH (Prevention of Sexual Harassment)

A written policy plus a functioning Internal Committee.

MandatoryInternal Committee required at 10+ employees. Below that, a written policy is best practice.

7Statutory compliance and benefits

How PF, ESIC, Professional Tax and gratuity apply, and what shows on payslips.

MandatoryTriggers at defined headcount thresholds. Once registered, monthly compliance is ongoing.

8Performance and growth

Review cycles, promotion criteria, and how performance ties to pay.

Best practiceBecomes protective once performance decisions can no longer be explained informally.

9IT, data and asset use

Device use, passwords, and personal data under India’s data protection law.

Best practiceFrom early on; higher stakes once you handle personal data at volume.

10Grievance redressal

A defined channel and process for raising and resolving concerns.

Best practiceExpected as a baseline beyond a handful of employees.

11Travel and expense

Reimbursement limits, approval workflow and documentation.

Best practiceNot statutory. Sequence it in once expense claims become routine.

12Exit and full-and-final settlement

Notice, handover, and how final settlement including gratuity is calculated.

MandatoryFrom your first exit, at any size. Gratuity rules apply once eligibility conditions are met.

Priority table: what’s mandatory vs. best-practice, and when it kicks in

Policy	Mandatory or best-practice	Trigger point
Appointment letter / employment agreement	Mandatory	Employee 1, day one
Compensation & payroll policy (incl. wage floor)	Mandatory	First payroll run
Leave policy	Mandatory (state-specific minimums)	Shops & Establishment registration
Statutory compliance (PF/ESIC/PT)	Mandatory once thresholds crossed	Headcount and wage-ceiling triggers (confirm current thresholds)
POSH policy + Internal Committee	Mandatory (IC); policy is best-practice below threshold	10+ employees for IC
Exit / full-and-final settlement policy	Mandatory in principle	First exit
Code of conduct	Best-practice	Day one, tightens with team size
Attendance / remote work policy	Best-practice; interacts with Standing Orders	Formalise before Standing Orders thresholds apply
Performance and growth policy	Best-practice	Once informal reviews stop scaling
IT, data, and asset use policy	Best-practice; higher stakes with personal data	Early, tightens with data handling volume
Grievance redressal policy	Best-practice, increasingly expected	Beyond a handful of employees
Travel and expense policy	Best-practice, situational	Once travel/expense claims become routine

Swipe the table sideways on mobile to see all three columns.

What changed under the Labour Codes

India’s four Labour Codes came into force on 21 November 2025, replacing a patchwork of older labour laws. Two changes matter most for HR policy work:

Written appointment letters are now mandatory for every employee.
At least 50% of total remuneration must count as wages (basic pay plus dearness allowance) when calculating PF, gratuity and other statutory dues. Structures built to minimise the wages component may no longer comply.

The Codes also change Standing Orders thresholds, social security for gig and platform workers, and OSH obligations. For the fuller list, see the HR Compliance Checklist 2026.

Common mistakes founders make

Copying a template and never touching it againA generic pack won’t match your state’s leave minimums or your headcount triggers, and the law has changed since you downloaded it.
Writing policies nobody has readIn a dispute, “we had a policy” only holds if you can show employees received and acknowledged it.
Missing the POSH thresholdFounders track headcount for hiring, rarely for compliance. Crossing 10 without an Internal Committee is the most avoidable gap there is.
Treating compensation structuring as a one-time decisionCTC structures built before the Labour Codes may now fail the 50% wages floor. It needs periodic review.
Assuming policies scale with headcountThe jump from 9 to 10 employees is a threshold, not a gradient. “We’ll deal with it when we’re bigger” misses the moment bigger arrived.
No documented grievance processSmall frustrations become resignations, public reviews or legal notices. A simple, communicated process prevents most of it.

How to sequence rollout in the first 90 days

You don’t need all 12 policies at once. You need the right ones in the right order.

Days 1-30

Appointment letter template, compensation and payroll policy with the 50% wages floor built in, and leave policy. Two of the three are non-negotiable from your first hire.

Days 31-60

Code of conduct, attendance and remote work policy, and statutory compliance covering PF, ESIC and PT. Confirm whether you have crossed any registration thresholds.

Days 61-90

POSH policy and Internal Committee if you are near 10 employees, grievance redressal, IT and data use, and performance. Travel, expense and exit follow.

The Startup HR Policy Pack gives you an editable starting point for all 12 areas in one document.

Do it yourself, or hand it over

Templates work if you have time to customise and maintain them. Teams get stuck keeping policies current as law changes and headcount crosses thresholds. HRTailor’s HR policy drafting service maintains this as part of ongoing outsourced HR support, and our HR outsourcing for startups plans bundle it with payroll, compliance and HRMS.

Get your policies sorted this week

Start with the free Startup HR Policy Pack, or talk to HRTailor if you’d rather have a real HR manager set it up and keep it current as your team grows.

Frequently Asked Questions

What HR policies do startups need?

Core policies such as code of conduct, leave, attendance, grievance, and anti-harassment.

When should a startup create HR policies?

Early, ideally before or soon after the first hires.

Do small startups need written HR policies?

Some, such as anti-harassment, are required once thresholds apply, and others are strongly recommended.