Hi,
We have a company A and Company B (wholly owned by company A with common directors)and want to use the employees of company A in company B. We would like to make sure employee doesn’t loose their benefits like accrued leaves, gratuity, continuous employment etc.
A) Should the Employee be asked to resign from company A and issue fresh offer from company B.-Should the employee be given reliving/experience letter and FnF?
B) Transfer/depute the employee from Company A to Company B. What are the formalities to be taken care.
Please share the pros and cons of each options and if there are any other options to be explored.
We want the employees to be on payroll of Company B.
Please share your valuable suggestions
Regards
Riju
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Hi @Riju
A) Should the Employee be asked to resign from company A and issue fresh offer from company B.-Should the employee be given reliving/experience letter and FnF?
Ans : You have mentioned that A company wants that employees to be on payroll of B so in that case employee has to resign from company A and then you have to share experience, relieving letter and F&F. Company B has to share Offer & appointment letter to employees.
B) Transfer/depute the employee from Company A to Company B. What are the formalities to be taken care.
Ans : There is a internal transfer case, where employee will be on payroll of company A and will get all benefits but will work work for company B.
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Company A & B must enter in to an agreement mentioning the treatment of employees of A. Upon such agreement Company A must issue a letter of intimation to its employees saying that they will continue on the rolls of company B. Company B must also issue appointment letter having a mention / reference about the agreement.
For Gratuity, if you have obtained Insurance policy, then check with the insurer for the formalities as the insurance must be issued in the name of Company B.
PF and ESI - treat as a new joinees in company B
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A) Should the Employee be asked to resign from company A and issue fresh offer from company B.-Should the employee be given reliving/experience letter and FnF?
Ans. You can issue a letter of transfer to employees from A to B company, mention in the transfer letter that continuity of service and benefits associated with A company will continue in B company.
B) Transfer/depute the employee from Company A to Company B. What are the formalities to be taken care.
Ans. Issue a Transfer letter,
Inform/Educate & bring confidence in the Employees that the transfer will not deprive any of the rights and privileges which they were eligible in A Company.
Inform the Employees the transfer is just a Administrative requirement and nothing beyond.
The service rendered by them in A company will be continued in the B company .
Please share the pros and cons of each options and if there are any other options to be explored.
Pros: If there are no grievances from the employees for such a transfer, there is absolutely no wrong in this action.
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I agree with @Anil.Kumar
If there is arelation between company A&B then we can transfer the employees. There is no point of asking them to resign and issue offer letter, etc if you are continuing their services. So that their experience will be continued as well for company benefits. Only the difference is you have to create them as new in the satutories of B and exit in A.
Regards,
Sowjanya
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If employee is settled in company A and join Company B (i.e to fulfill the current requirement of managing payroll of such employees in Company B), then for compliance purpose these employees will be treated as new joinees in Company B (PF, ESI, PT, LWF etc.).
Another concern is Gratuity, If the employees are not completed 5 years - what happen? Waiting for other experts view on this matter.
Note: Deputaiton and transfer could simplify the whole affair. However it is up to the directors to take a call
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