MW and statutory benefits
Minimum Wages
To prevent exploitation of workers, Minimum Wages Act provides for the fixation of minimum wages in scheduled industries. These rates are generally revised twice a year. In order to cut cost, the outsourcing company quotes wages which are not in keeping with the labour law. Many companies which outsource housekeeping do not know that it is they who are likely to come under the scanner of the labour department and not the housekeeping company offering services, because the outsourcing company becomes the principal employer of the housekeeping workers. The principal employer is accountable and end up committing a criminal offence for not following the labour Laws.
Provident Fund Provident Fund is the scheme whereby the employee contributes 12% of his salary and the employer makes matching contribution of 12%. In addition, the employer also contributes 1.61% as administrative charges to the PF account. The biggest advantages of PF is the saving on which a worker gets a substantial interest of 8.5%. Workers can also avail of loan against the PF. In India, to save on PF, many housekeeping companies are engaged in malpractices whereby their book show different numbers from what actually exists.
Employee’s Insurances
Under the ESIS or the Employee State Insurance Scheme the employer pays 4.75% and deducts 1.75% of the employee’s salary. It is mandatory for any company, including a housekeeping company, to provide ESI coverage to all employees having salary up to 15000/- per month. Every state has an ESIS body which issues the ESIS card and number. Except some remote areas, ESIS medical centres are available across the country. Some cities even have super specialty hospitals. This insurance scheme amounting to a total of 6.5% of the salary, covers the medical requirements of the employee and his family. The employee can use his ESI card and number to receive sickness, maternity and employment injury benefits. Any hospitalisation is paid by the ESIS. Even in case of fatal diseases or mishap or impairment, the employee is covered under this scheme. In case of fatality, the worker’s dependent survivors receive pension. This provides social security to the worker and his family.
The ESI scheme is not only mandatory but also works in the interest of the worker. By not providing for ESI, the company is not saving on money but committing a criminal offence by going against the health of the worker.
Gratuity
Gratuity is payable to an employee on the termination of his employment after he has rendered continuous services for at least five years. Termination of service may be due to retirement, resignation, death or disablement. Completion of five years of service is not necessary in case of death or disablement. Employer is required to pay gratuity to an employee at rate of 15 days wages (last drawn) for every completed year of service or past here of in excess of six months. As per the Income Tax Act the company has to maintain gratuity records of employees and the data has to be reflected in the books of accounts. Gratuity records have to be maintained for all employees irrespective of the number of years of services.
Bonus
Employees up to 10,000/- per month salary are entitled to bonus as per the provisions of Payment of Bonus Act.
Paid Leave
Employees are entitled to privilege leave, casual leave/sick leave as per the legal provisions of various states. Paid leave amounts to 9% of salary approximately. Weekly off is mandatory but some housekeeping companies deny this and make employees work for seven days a week.
These are some of the Acts which every housekeeping company should follow, as Labour Laws are stringent. By following all of the above, a housekeeping company abides by the law of the land and moves towards becoming an organised company.
Cleaning Partnership
In a major initiative to formally outsource housekeeping services in adherence to all the statutory norms that go along, HDFC Bank took the lead four years back. With more than 2000 branches, 4000 ATMs and 200 odd offices, HDFC bank has 10,000 cleaning staff in housekeeping and about 100 contractors offering cleaning services. “Budgets are no constraints where salaries to cleaning employees are concerned. In adherence to the Minimum Wages Act, we pay on the basis of what is laid down by the Government, whichever is higher, Central or State. We have been following the norms for the last four years.It’s only a year or two back that other banks have standardised payments,” says Ravi Valecha, Head-Hospitality, HDFC Bank Ltd.
Emphasising his point, Ravi Valecha says that at HDFC Bank, the approach is neither on a budgetary constraint nor on uncompetitive rates of payment. “In fact, the amount that we are paying to the staff is the highest in the country. The payment again is made directly to the staff through the vendor. In the sense, we ensure that each and every worker employed with HDFC bank gets his/her due salary without fail before the seventh of each month. Either the bank statement of the employee or whatever the mode of payment, the vendor has to attach it along with the next bill. Only then the payment is released. Even the proof of bonus and other statutory benefits being paid to the workers has to be furnished by the vendor.”
The payment system at HDFC bank is centralised. The vendors submit their bills to the state heads which is sent to the regional heads. A team under the regional division collects the bills and verifies them before clearing it for payments. The bills are then forwarded to the central administration in Mumbai. “The hospitality department at the main office in Mumbai again verifies at random on whether the statutory benefits – ESI, bonus, etc., have been paid by the vendor and the salaries have been deposited into the respective accounts. Apart from this, we also take from the vendor, a confirmation from chartered accountant, who is a third party, to verify and confirm that the statutory payments have been made legally on whatever is due to the worker.
As the payments are based on government rules, it is a common standard followed across the board throughout the country, irrespective of the vendor. Hence, as far as empanelling the new vendor is concerned, the selection is hardly on a budget basis and “money is definitely not the criteria”. At the same time, if the vendor is unable to produce the attendance and proper bills as specified the payment is definitely delayed. “Even if there is a single discrepancy, the bills are sent back which will take about 15 days. After the bill is rectified at the vendor’s end and sent back, another week or 10 days go by. In short, instead of the bills reaching the central office on the 10th of each month, the bill reaches us only in the first week of the next month. Hence, the delay. There are also vendors who have a checklist and comply with the requirements of HDFC bank. In such cases they receive their payment within 30 days,” explains Valecha.
Speaking of the quality service rendered by the service providers, “at HDFC or for that matter in any bank, the use of equipment is not encouraged. Most of the cleaning is done manually. There is not much of automation but with cleaning chemicals we have laid standards. We do not enforce on the vendors to use a particular chemical but we give them a choice of three brands. Whichever brand they chose, HDFC negotiates on the costing of the product directly with the supplier. On the basis of per square feet cleaned, we finalise the payment to the vendor.”
But given the large area to be cleaned, banks should be encouraging mechanised cleaning. “Basically because we want to provide employment to more people and housekeeping is one industry which has a large scope of employing such workers,” says Valecha.
In order to ensure that quality cleaning is adhered to, HDFC bank also penalises when standards are not met. “If there is any lapse in cleaning standards, we do not hold the worker responsible. It is more to do with the supervision and hence, we penalise the vendor directly and not the worker.”
The consumption of cleaning material is on a large scale at HDFC bank given the expanse of area to be cleaned. Since the HDFC bank procures only 5% of the stocks required, the vendors are given the option to negotiate further with the supplier and procure the rest of the required chemicals directly from the supplier. Right from tissue paper to cleaning tools, HDFC bank procures good quality brands.
These workers follow the standard operating procedures and checklist. “With a lot of absenteeism and high rate of attrition in the housekeeping sector, we directly train the vendors and they in turn train the housekeeping staff. Thus, there is no discrepancy. Here I would like to add that at HDFC bank, the attrition rate is almost non-existent. Since we ensure that workers get their salaries, bonuses and statutory benefits on time, they don’t want to leave HDFC bank. Yet for the safety and business continuity plan of the organization, we give them job cards, and even if one leaves there is always a substitute who could just read through and get on to the job.”
The hospitality department of HDFC bank is ISO certified. “As part of the ISO audit we have to maintain all the checklists, SOPs and cleaning schedules. For example, at an ATM, the attendant would have a checklist where he makes an entry of the activities finished – main signage board at 10am, door at 10.30am, cleaned the ATM machine at 11am, mopped the floor at 11.30am. In short, everything is meticulously entered in the checklist.” Similarly, the specialised cleaning jobs are outsourced to companies who have the expertise to do so. “In case of façade cleaning at any of the office premises, if the housekeeping company does not have the trained manpower, then we have another vendor to do the facades. This is important for the safety of the workers. We have Sanjay Maintenance Services, Property Solutions and Mazda Hospitality besides others doing the housekeeping at HDFC bank.
“Finally, be it the housekeeping staff, pantry workers or the security guards, we treat them not as vendors but partners. If every organisation looks at the outsourced agency as their partners, life would become easier. At HDFC bank, there are monthly, quarterly and half-yearly meets with all our partners. This also enables to resolve differences and issues amicably.”
