Industrial Relations And Labour Laws
Employer Branding, Marcom, Talent Acquisition;
Pranay Patil
Hr Generalist
Job - Hr And Admin
Hr Manager
+3 Others

We were working for an US company and they shut down the company by filing bankruptcy.. We were not given any notice or intimation about the shut down in advance. They have paid us the salary for that last month..
All the employees who are questioning me about the compensation for not giving prior notice. Please let me know your suggestions on the liabilities and procedure to claim compensation if any from the employer who is in the US. Your ideas will help the employees who are left jobless..
28th October 2008 From India, Coimbatore
Employees should look of alternate employment opportunities and NOT expect a compensation for NOT providing a notice - Please see if this article help you in any manner: Bankruptcy
Due to lack of time I was NOT able to do much research on your question, please do not consider this as ignorance and kindly oblige. However you have raised a brow and a thought that we need to have more knowledge in dealing with such situations.
28th October 2008 From India, Bangalore
If they appeal in indian court, they will get all compensation as well as jobless time period payment. Regards PRANAY
28th October 2008 From India, Delhi
They haven't cleared the PF and ESI dues for that month... We don't have an employer to sign the claim forms and no one had submitted the returns for the current fiscal year...
Will the EPFO take necessary action against the US employer ? ......
29th October 2008 From India, Coimbatore
Since they have filed for bankruptcy in US..they need to do the same in India as well u need to inform the Registrar of Companies or may be Labour Office for the same (Pls check). You cannot terminate the employees like this even if your company has become bankrupt there are minimum obligations you need to fulfill if any employee approaches that you have fired them without sufficient notice and compensation your company can be in trouble….
29th October 2008 From United Kingdom
registered under which act? also if over 100 employees would need to file and gain approval for retrenchment prior to dismissal joseph
29th October 2008 From India, Kochi
Registered Under the Companies Act of India and the employment strength is less than 50.... Its 36 approx
29th October 2008 From India, Coimbatore
Hi Mike,

Like to inform you that, once I asked our PF consultant about the same case & they told that if the company get shut & employees willing to withdraw there PF money then they can take authorized signature of any high post govt employee, CA, Lawyer etc…

I think you should find out this from PF office.

Hope this will help you & your employees…

30th October 2008 From India, Mumbai
Dear Friend,Any firm should not be closed simply. First you have not clearly mentioned about the details of your firm. Is it registered as per companies act.? Who is the principal Employer since you say it it MNC. If you are an MNC is it registered as a Contractor (either principal contractor) with any local Labour department ? Are all the employees covered under PF / ESI act ? If such case there is procedure to closing down the organisation.For this please go through the attachment.Regards,PBS KUMAR
30th October 2008 From India, Kakinada

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Closing down of an establishment employing 36 will not require much complicated procedure. Moreover and since the employer has been adjudged insolvent (or is about to be adjudged insolvent) employees may not be able to find any way out. The Administrators appointed by the Court (in US) will decide the amount to be paid to each employee. However, since the company is registered in India, the relevance of insolvency petition in the US will have to be studied with reference to Companies Act and Insolvency Act in India. Whatever be the provisions, the matter will take time to settle.

As pointed out by the aggrieved, it is not the sole responsibility of the HR Manager to pay the compensation to the employees. Definitely, being an HR Manager, you have to ensure that all dues are paid to the employees. But at the same time if the Finance Department does not take initiative how can an HR man disburse the amount? The decision to pay compensation etc should come from the Board of Management delegated through Finance Deptt to HR.

I feel with the depression and recession in the US many employees are going to be retrenched. This is not a micro level issue but a national issue. Therefore, some kind of ruling from the Labour Ministry is required to enacted to rehabilitate those becoming jobless. When employees of Indian Companies get protection why don't employees of MNCs? Let us hope for the best.


30th October 2008 From India, Kannur
Dear Madhu ji,Is there is notification that for 36 employees not required any procedure. If so please supply. The firm meance any where it should be registered as per Indian Acts are concern.REgards,PBS KUMAR
30th October 2008 From India, Kakinada
It is quite scary to see this issue as it can impact any MNC today.
It is critical to assess the employer throughly before joining a newly established muti-national Company.
Thank you all for sharing all the knowledge.
Regards & Season's greetings
30th October 2008 From India, Mumbai
I really appreciate your time and thoughts to my post. I am really grateful to you all.
I am sure whether this can be posted out here from a HR person. But still the passion and love that I have towards my profession creates an interest in to explore more into this situation and get the best possible for the employees who are jobless at the end of the day. As Madhu stated this is matter should be looked upon in a broad angle because it is the present scenario in most of the companies as per the present market conditions.

The information below might be useful for you to give a close solution...

The company is registered under the Companies Act of India and registered as a Privated Limited in the Registrar of Companies in 2006. All the employees are covered under the EPF scheme and those applicable are covered under ESI Scheme. The owners of the company are residents of the US. The authorised person who used to sign the forms also resigned from the company on the same day. The salaries were paid till the date the company operated and there is no pending in that. But all these 36 employees lost their job and they are not sure on how to claim their EPF amount. The EPF claim forms are getting rejected since the details for the current fiscal year has not reached them.
When the returns are not submitted and when the closing formalities what is the procedure to get the claims done. Who will be responsible if an employee files a legal complaint against the company?
30th October 2008 From India, Coimbatore
Dear Mr PBS Kumar,
Chapter V-A of the Industrial Disputes Act, 1947, (sections 25 C to 25 E) relating to lay off and retrenchment applies to those units in which not less than 50 workers are employed. This chapter does not apply to units employing more than 100 workers (to which Chapter V-B applies)
For companies employing less than 100 workers prior intimation to the government of its intention to close down the company and thereby retrench the workmen is required to be given (Section 25 F). At the same time for companies to which chapter V-B applies, prior permission from the government is required to close down ( Section 25 O). Please correct me if there exists any state amendment regarding the number of employees and application of these two chapters, viz, Chapter V-A and V-B.

Well, the issue was not in fact relating to closure and legality of such closure. Closure has been carried out and that also without any intimation. Since there is no dues pending to EPFO or ESIC filing of nil return for the forthcoming period is enough for them. If at all current year details are required, the same can be managed by consolidation of monthly returns. In order to claim the PF, since the authorised signatory has also left authorities mentioned in the Act, viz, Bank Manager etc, shall be approached and it will not be a problem for the employees to get it. Alternatively, they can easily get the PF transferred to the new account when they join some other firm.

Since the employees do not have any dues in the form of salary the question of filing suit against the company (under section 15 of Pyament of Wages Act?) will not come. Then what is required is to get protection from clients who have dues from the company. This will become a law and order matter and requires attention of the government and local administration.

As stated earlier, it requires a general attention and I feel some way will be found at the earliest.


31st October 2008 From India, Kannur
Good discuss on recession time , Because lots of people lost thier job without compensation
31st October 2008 From India, Delhi
Hi All,

I need a serious help here. I have gone through above posts. However the case is similar but employee dues and compensations are different.

I used to work in a US based Software MNC company registered in India ROC having 35 employees here in India. Recently the company has closed down its operations world-wide without giving any formal intimation or termination letters. They had only paid our closing month salary as they shut down on the last day of the month of July 2010. They have not filed any bankruptcy in US. The company is now under a secured creditor in US. All higher management of the company in US including the Board of Directors has been dissolved. Now the secured-creditors have employed our ex-CTO as the acting CEO of the company to help in winding up of the company world-wide.

In terms of compensation they are only paying us 1 month termination notice salary as mentioned in tour appointment letters. Apart from this all employees have the following dues pending:

1. Earned Leaves settlement

2. Form 16: They have deducted tax from our salary in the month July 2010.

3. July 2010 Pay slips

4. Pending Salary Re-imbursements viz. Medical, Car Lease, Telephone/Internet etc.

5. PF : Deducted till July 2010

6. Staff Welfare Fund: This fund accumulated from voluntary deductions from our salaries every month for staff outings and parties. It is a big amount.

7. Relieving letters

So I want to know how we can claim all of the above.

a.What are the legal formalities involved in this?

b.From where to start the procedure?

c.Where to read the laws governinig a Company insolvency in India?

d. How can employees claim the dues, compensation and complete all the necessary legal formalities.

13th September 2010 From India, Delhi
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