Can you tell me what procedures should be followed by the HR during a company shutdown for closing the PF and ESI? Should we issue any certificates for the employees for the shutdown, etc.? Can you guide me through this?
Thanks,
Ishwarya Velliangiri
From India, Chennai
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1Thanks,
Ishwarya Velliangiri
From India, Chennai
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Dear Iswarya,
Please send the letter to the concerned SSO and PF Commissioner with respect to the Esment Code and make a CC to IF/DCIF in case of the manufacturing unit.
Please show the following evidence to them:
1. Closing Electric Supply Document
2. Bank Account
3. Machine Selling Document
Etc.
You must intimate to the employee if anyone has worked for more than 5 years; this means you must pay gratuity.
Thank you.
From India, Chennai
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Please send the letter to the concerned SSO and PF Commissioner with respect to the Esment Code and make a CC to IF/DCIF in case of the manufacturing unit.
Please show the following evidence to them:
1. Closing Electric Supply Document
2. Bank Account
3. Machine Selling Document
Etc.
You must intimate to the employee if anyone has worked for more than 5 years; this means you must pay gratuity.
Thank you.
From India, Chennai
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Sir,
The records of employers with reference to compliance under the ESI Act, 1948, are maintained at the appropriate Regional/Sub/Divisional Offices of ESIC. Therefore, it is necessary that the correspondence in respect of temporary or permanent closure of the factory/unit should be sent to the appropriate office as mentioned above by indicating therein the Code Number and date of such closure. In case intimation is not received by the appropriate authority, the dues can be assessed on an ad hoc basis under sections 45-A/45-B of the said Act.
There may be some documents of closure of the unit, such as a sale deed, disconnection of the electric meter, dissolution of the firm, etc. Therefore, copies of all such documents may also be sent along with the letter as mentioned above.
There is no harm if the copies of the letter are also sent to the appropriate Social Security Officer/Branch Manager of ESIC.
From India, Noida
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The records of employers with reference to compliance under the ESI Act, 1948, are maintained at the appropriate Regional/Sub/Divisional Offices of ESIC. Therefore, it is necessary that the correspondence in respect of temporary or permanent closure of the factory/unit should be sent to the appropriate office as mentioned above by indicating therein the Code Number and date of such closure. In case intimation is not received by the appropriate authority, the dues can be assessed on an ad hoc basis under sections 45-A/45-B of the said Act.
There may be some documents of closure of the unit, such as a sale deed, disconnection of the electric meter, dissolution of the firm, etc. Therefore, copies of all such documents may also be sent along with the letter as mentioned above.
There is no harm if the copies of the letter are also sent to the appropriate Social Security Officer/Branch Manager of ESIC.
From India, Noida
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Thanks, Venkat and Harsh Kumar Mehta for your valuable reply.
Can you also tell me how many months' pay we should give to employees? Does it depend on the company or are there any standard formalities?
Thanks,
Ishwarya
From India, Chennai
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Can you also tell me how many months' pay we should give to employees? Does it depend on the company or are there any standard formalities?
Thanks,
Ishwarya
From India, Chennai
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Dear Iswarya Please Refer ID Act Sec 25 fff, it will Give clear Cut idea to you ...
From India, Chennai
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From India, Chennai
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Let me summarize your query as follows:
1. Procedures that HR has to follow with respect to employees, F & F settlement.
2. Procedures required with the Labour Department.
3. Other requirements.
I suggest the following steps (with the information provided, to save time I will provide these steps directly, but you should ensure what is required by consulting the appropriate authorities):
1) First of all, you should apply in the prescribed form seeking permission from the appropriate government authority, the Labour Department, surrendering the registration certificate issued by them. If the Industrial Disputes Act is applicable, you have to comply with the provisions of Section 25 (o). Please see attachment for details.
The minimum compensation required for the settlement of employees includes:
a) Retrenchment compensation: 15 days' salary for every year of completed service.
b) Gratuity: As per the Gratuity Act or your applicable Gratuity rules.
c) Encashment of accumulated leave.
d) Settlement of EPF or transfer formalities wherever applicable and other formalities as per the Employee Pension Fund, EDLI.
e) Any other funds/benefits accrued to them in case of cessation of employment.
There won't be any payment from ESI. You may check with them whether these retrenched employees are eligible to avail treatment, etc., until the end of the contribution benefit period (up to October '14/March '15).
2) It wouldn't be sufficient to only issue letters to employees, EPO, ESI, PTO. You have to issue advance notice individually to all the employees, which have to be acknowledged by the concerned parties, quoting the reference number of the government approval.
You have to file the return ONLINE on the portal of EPO & ESI to close all the employee-related data as required.
(Nowadays, EPO & ESI do not close the registration of the employer only on receipt of a formal closure letter; they also require certified accounts and proof of closure of bank accounts to support the completion of closure efforts. I am not sure whether authorities in Chennai insist on all these at present).
3) Surrender of Excise Department, Service Tax, VAT registration. Compliance requirements have to be taken care of by your Finance/Accounts and/or Company Secretary, including formalities required under the Companies Act, 1956.
From India, Bangalore
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1. Procedures that HR has to follow with respect to employees, F & F settlement.
2. Procedures required with the Labour Department.
3. Other requirements.
I suggest the following steps (with the information provided, to save time I will provide these steps directly, but you should ensure what is required by consulting the appropriate authorities):
1) First of all, you should apply in the prescribed form seeking permission from the appropriate government authority, the Labour Department, surrendering the registration certificate issued by them. If the Industrial Disputes Act is applicable, you have to comply with the provisions of Section 25 (o). Please see attachment for details.
The minimum compensation required for the settlement of employees includes:
a) Retrenchment compensation: 15 days' salary for every year of completed service.
b) Gratuity: As per the Gratuity Act or your applicable Gratuity rules.
c) Encashment of accumulated leave.
d) Settlement of EPF or transfer formalities wherever applicable and other formalities as per the Employee Pension Fund, EDLI.
e) Any other funds/benefits accrued to them in case of cessation of employment.
There won't be any payment from ESI. You may check with them whether these retrenched employees are eligible to avail treatment, etc., until the end of the contribution benefit period (up to October '14/March '15).
2) It wouldn't be sufficient to only issue letters to employees, EPO, ESI, PTO. You have to issue advance notice individually to all the employees, which have to be acknowledged by the concerned parties, quoting the reference number of the government approval.
You have to file the return ONLINE on the portal of EPO & ESI to close all the employee-related data as required.
(Nowadays, EPO & ESI do not close the registration of the employer only on receipt of a formal closure letter; they also require certified accounts and proof of closure of bank accounts to support the completion of closure efforts. I am not sure whether authorities in Chennai insist on all these at present).
3) Surrender of Excise Department, Service Tax, VAT registration. Compliance requirements have to be taken care of by your Finance/Accounts and/or Company Secretary, including formalities required under the Companies Act, 1956.
From India, Bangalore
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Please note the attachment.
Industrial Disputes Act, 1947:
"25-O. Procedure for closing down an undertaking.-
(1) An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, in the prescribed manner, apply for prior permission at least ninety days before the date on which the intended closure is to become effective, to the appropriate Government, stating clearly the reasons for the intended closure of the undertaking. A copy of such application shall also be served simultaneously on the representatives of the workmen in the prescribed manner:
Provided that nothing in this sub-section shall apply to an undertaking set up for the construction of buildings, bridges, roads, canals, dams, or for other construction work.
(2) Where an application for permission has been made under sub-section (1), the appropriate Government, after making such inquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen, and the persons interested in such closure, may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the general public, and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission. A copy of such order shall be communicated to the employer and the workmen.
(3) Where an application has been made under sub-section (1) and the appropriate Government does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days.
(4) An order of the appropriate Government granting or refusing to grant permission shall, subject to the provisions of sub-section (5), be final and binding on all the parties and shall remain in force for one year from the date of such order.
(5) The appropriate Government may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant permission under sub-section (2) or refer the matter to a tribunal for adjudication, in which the proceeding is pending, for approval of the action taken by the employer.
(3) Notwithstanding anything contained in sub-section (2), no employer shall, during the pendency of any such proceeding in respect of an industrial dispute, take any action against any protected workman concerned in such dispute:
(a) by altering, to the prejudice of such protected workman, the conditions of service applicable to him immediately before the commencement of such proceeding; or
(b) by discharging or punishing, whether by dismissal or otherwise, such protected workman, save with the express permission in writing of the authority before which the proceeding is pending.
Explanation - For the purposes of this sub-section, a "protected workman," in relation to an establishment, means a workman who, being a member of the executive or other office-bearer of a registered trade union connected with the establishment, is recognized as such in accordance with rules made in this behalf.
(4) In every establishment, the number of workmen to be recognized as protected workmen for the purposes of sub-section (3) shall be one percent of the total number of workmen employed therein, subject to a minimum number of five protected workmen and a maximum number of one hundred protected workmen. For the aforesaid purpose, the appropriate Government may make rules providing for the distribution of such protected workmen among various trade unions, if any, connected with the establishment, and the manner in which the workmen may be chosen and recognized as protected workmen.
(5) Where an employer makes an application to a conciliation officer, Board, an arbitrator, a Labour Court, Tribunal, or National Tribunal under the proviso to sub-section (2) for approval of the action taken by him, the authority concerned shall, without delay, hear such application and pass, within a period of three months from the date of receipt of such application, such order in relation thereto as it deems fit:
Provided that where any such authority considers it necessary or expedient to do so, it may, for reasons to be recorded in writing, extend such period by such further period as it may think fit:
Provided further that no proceedings before any such authority shall lapse merely on the ground that any period specified in this sub-section had expired without such proceedings being completed.
From India, Bangalore
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Industrial Disputes Act, 1947:
"25-O. Procedure for closing down an undertaking.-
(1) An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, in the prescribed manner, apply for prior permission at least ninety days before the date on which the intended closure is to become effective, to the appropriate Government, stating clearly the reasons for the intended closure of the undertaking. A copy of such application shall also be served simultaneously on the representatives of the workmen in the prescribed manner:
Provided that nothing in this sub-section shall apply to an undertaking set up for the construction of buildings, bridges, roads, canals, dams, or for other construction work.
(2) Where an application for permission has been made under sub-section (1), the appropriate Government, after making such inquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen, and the persons interested in such closure, may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the general public, and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission. A copy of such order shall be communicated to the employer and the workmen.
(3) Where an application has been made under sub-section (1) and the appropriate Government does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days.
(4) An order of the appropriate Government granting or refusing to grant permission shall, subject to the provisions of sub-section (5), be final and binding on all the parties and shall remain in force for one year from the date of such order.
(5) The appropriate Government may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant permission under sub-section (2) or refer the matter to a tribunal for adjudication, in which the proceeding is pending, for approval of the action taken by the employer.
(3) Notwithstanding anything contained in sub-section (2), no employer shall, during the pendency of any such proceeding in respect of an industrial dispute, take any action against any protected workman concerned in such dispute:
(a) by altering, to the prejudice of such protected workman, the conditions of service applicable to him immediately before the commencement of such proceeding; or
(b) by discharging or punishing, whether by dismissal or otherwise, such protected workman, save with the express permission in writing of the authority before which the proceeding is pending.
Explanation - For the purposes of this sub-section, a "protected workman," in relation to an establishment, means a workman who, being a member of the executive or other office-bearer of a registered trade union connected with the establishment, is recognized as such in accordance with rules made in this behalf.
(4) In every establishment, the number of workmen to be recognized as protected workmen for the purposes of sub-section (3) shall be one percent of the total number of workmen employed therein, subject to a minimum number of five protected workmen and a maximum number of one hundred protected workmen. For the aforesaid purpose, the appropriate Government may make rules providing for the distribution of such protected workmen among various trade unions, if any, connected with the establishment, and the manner in which the workmen may be chosen and recognized as protected workmen.
(5) Where an employer makes an application to a conciliation officer, Board, an arbitrator, a Labour Court, Tribunal, or National Tribunal under the proviso to sub-section (2) for approval of the action taken by him, the authority concerned shall, without delay, hear such application and pass, within a period of three months from the date of receipt of such application, such order in relation thereto as it deems fit:
Provided that where any such authority considers it necessary or expedient to do so, it may, for reasons to be recorded in writing, extend such period by such further period as it may think fit:
Provided further that no proceedings before any such authority shall lapse merely on the ground that any period specified in this sub-section had expired without such proceedings being completed.
From India, Bangalore
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To: Sr. CiteHR Members
Kindly provide details for the following situation: Company XX, employing more than 100 workers in Bangalore, wants to shift/relocate to another factory/shed in Bangalore at a distance of 60 km from the existing factory. I request Sr. Members to guide on what steps need to be taken to comply with the relevant Acts and Rules. What notices should be issued/given to the employees, the Labour Department, Factory Inspectorate, and other authorities? Please provide details along with any available format.
Kind Regards,
C.neyimkhan@gmail.com
14.8.14
From India, Bangalore
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Kindly provide details for the following situation: Company XX, employing more than 100 workers in Bangalore, wants to shift/relocate to another factory/shed in Bangalore at a distance of 60 km from the existing factory. I request Sr. Members to guide on what steps need to be taken to comply with the relevant Acts and Rules. What notices should be issued/given to the employees, the Labour Department, Factory Inspectorate, and other authorities? Please provide details along with any available format.
Kind Regards,
C.neyimkhan@gmail.com
14.8.14
From India, Bangalore
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Dear Khan,
You should furnish other relevant details like:
1. Whether the same company, i.e., your Company 'XX,' is relocating to a distant place en-mass or if Company 'XX' is merging with some other existing company by vacating the present location. In other words, are you trying to change your address in 'as is where is' condition 'lock, stock & barrel'?
2. Are you registered under the Factories Act or the Shops & Commercial Establishment Act?
3. In which state is your factory located?
4. Are you changing your company's name and structure?
From India, Bangalore
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You should furnish other relevant details like:
1. Whether the same company, i.e., your Company 'XX,' is relocating to a distant place en-mass or if Company 'XX' is merging with some other existing company by vacating the present location. In other words, are you trying to change your address in 'as is where is' condition 'lock, stock & barrel'?
2. Are you registered under the Factories Act or the Shops & Commercial Establishment Act?
3. In which state is your factory located?
4. Are you changing your company's name and structure?
From India, Bangalore
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