Hi
If a new company is formed with the same staff and management, but with a change in directors, what documents should be provided to the employees along with their relieving letters? Additionally, will there be any issues for employees who have only completed 3-5 months of service in the previous company?
Can any one help me out with this
From India, Hyderabad
If a new company is formed with the same staff and management, but with a change in directors, what documents should be provided to the employees along with their relieving letters? Additionally, will there be any issues for employees who have only completed 3-5 months of service in the previous company?
Can any one help me out with this
From India, Hyderabad
You can not just inform the employees that a new company has been formed, and henceforth the directors will be different persons but you have to give effect to a lot of employment matters. These include the length of service, the date of joining of employees in the new employees, whether for the purpose of gratuity calculation at the time the employees leave the new company the service with the old company would be counted or not, if not counted, how to treat the service with the old company, whether the employees will be paid retrenchment compensation or not etc.
From India, Kannur
4219From India, Kannur
When a new company is formed with the same staff and management but new directors, employees should receive a relieving letter, an experience letter, a new appointment letter, and full and final settlement details. Employees with 3-5 months of service in the previous company should not face significant issues, although their tenure will be shorter in the experience documentation.
From India, Ludhiana
From India, Ludhiana
Issuing relieving letters and fresh appointment letters to each employee are secondary only. The primary issue to be resolved is to look into what is the objective of the formation of new company. If it is genuine, then the employees should know whether the company which is dissolved or liquidated has complied with the provisions of Industrial Disputes Act with reference to closing down and whether compensation has been paid or not. If not paid any retrenchment compensation, whether the service of the employees has been considered or agreed to be considered in the new company, and whether the service conditions including salary in the new company is superior to the old one, or if the employees are given option of getting relieved from the old company by accepting compensation or not.
Normally, these will be embodied in the form of a bi parties settlement among the management of the old company whose obligation is to ensure payment of compensation, gratuity, leave encashment etc, the management of the new company who will consider the date of joining of each employee to be the date of joining their company and undertake to pay gratuity etc on the basis of the date of joining the old company, and the employees or representatives of the employees. Such settlements are required to be sent to the Labour department so that it will become a legal document with flavour of an award which will be binding on the management and employees.
An act of not following the provisions of the ID Act and not making a settlement above referred will lead to a lot of confusions in future. Also, the act of transfer will be deemed to be an effort to avoid gratuity like payments by the management.
From India, Kannur
Normally, these will be embodied in the form of a bi parties settlement among the management of the old company whose obligation is to ensure payment of compensation, gratuity, leave encashment etc, the management of the new company who will consider the date of joining of each employee to be the date of joining their company and undertake to pay gratuity etc on the basis of the date of joining the old company, and the employees or representatives of the employees. Such settlements are required to be sent to the Labour department so that it will become a legal document with flavour of an award which will be binding on the management and employees.
An act of not following the provisions of the ID Act and not making a settlement above referred will lead to a lot of confusions in future. Also, the act of transfer will be deemed to be an effort to avoid gratuity like payments by the management.
From India, Kannur
The present position speaks of change of management and change of name of the company.
Since, employees have worked less than 240 days (completed 3-5 months),result of which employees are not eligible for compensation for end of service.
As the new formed company wants to absorb the employees of old company, so the management should terminate all employees on date of previous company dissolved. A fresh appointment letter with later date need to issue to the absorbed employees in the new company. The mangement should manage to take the resignation from the employees prior to absorb in the new company is the best and settled action.
From India, Mumbai
Since, employees have worked less than 240 days (completed 3-5 months),result of which employees are not eligible for compensation for end of service.
As the new formed company wants to absorb the employees of old company, so the management should terminate all employees on date of previous company dissolved. A fresh appointment letter with later date need to issue to the absorbed employees in the new company. The mangement should manage to take the resignation from the employees prior to absorb in the new company is the best and settled action.
From India, Mumbai
Okay but can we provide any specific document like NOC for continuity of service where employees exp remains the as a same company exp if in future they change the organization at that time they might not face any issue
From India, Hyderabad
From India, Hyderabad
Revati Attam,
Issuing of any document like NOC or continuity of service to absorbed employees shall create legal problem for the company. This action can be viewed the new company is in camouflage of old one. The continuity of service is out of question because the old company is existing no more after formation of a new company with new names. You can issue the experience letter to the employees in old company letter heads only, to the employees not absorbed by the new company. You can contact 8093097934 for further clarification.
From India, Mumbai
Issuing of any document like NOC or continuity of service to absorbed employees shall create legal problem for the company. This action can be viewed the new company is in camouflage of old one. The continuity of service is out of question because the old company is existing no more after formation of a new company with new names. You can issue the experience letter to the employees in old company letter heads only, to the employees not absorbed by the new company. You can contact 8093097934 for further clarification.
From India, Mumbai
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