Sr. Hr Executive @ Polymerupdate
Consultant & G.m.
+1 Other

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Dear all, Would require your guidance on followings, my sister is working with a company, last week her company given her termination letter with one month notice due to her company closing their business.

This letter has been given to all the employees of the company. As per letter, company's given notice period ends on 15th of April. Her company expects all the employees to work till last date ( 15th Apr 13) Company has paid the salary to all the employee till 31st march-13.

And company will paid salary for next 15 days on last day of the work as per termination letter.

Have following queries:

1) Does employee needs to work for a company after receiving termination letter with one month notice.

2) Also I feel company is not paying additional salary as per termination policy, they are paying salary for worked/ working days.

Please give me your expert advice. I truly believe company is cheating all the employee

What is the designation of your sister?

What industry is she working?

There is a difference between retrenchment and company closing their operations.

Retrenchment is related to down-sizing.

This happens when the company is to operate at a lower rate and hence needs less man power.

The company has to pay a retrenchment compensation and also when the company plans to re-hire ought to oblige their ex-workers (if any rendered job less till the point)

However, when the company is closing its operations, for whatever reason, how are they to appoint any person.

They have given a one month's notice.

Again just to mention that though there are obligations for retrenchment, those are for labours and are covered under labour laws. I doubt if the same are applicable for white collared workmen.

Again as I said, it all boils down to what industry is she working in and at what designation. What is the employee strength including labours if any.

And about your queries -

Yes. A termination letter when states that the company wishes to terminate the service for some reason, and the last working day would be XX-XXX-XXXX then the employee is expected to work till the said period.

Quite similar to the notice period serving when we file in a resignation letter.

However, if your sister wishes for an early exit, she should approach the HR of her company and negotiate accordingly.

Again since the company is closing its operation, they may not be wanting to give you salary in lieu of the notice period simply because -

They gave you considerable time, you are opting out of service and they may claim to be financially weak to compensate. They may claim that they might have talked of the option of leaving early if they might have afford it.

I don't thing this would be questionable.

However, seniors can advice on it.

What is the termination policy at their company? Are you aware if so pls elaborate.

If you are talking of the retrenchment compensation as I mentioned above, the obligation is covered under labor law and is meant for blue collared employees. I doubt if the same is covered for white collared employees.

Why do you think the company is cheating its employees. Can you elaborate so that we too can understand the whole scene.

Thank you for your response!
She is into e- commerce industry , managing operations
(a) four
(b) twelve
(c) one

I found a relevant article -

How to shut down a private limited company in India?

Here are the procedures for shutting down a private limited company in India.

1. Up-to-date returns (viz., Annual Return and Balance sheet) has to be filed with Registrar of Companies (ROC)

2. A statement of account has to be prepared one month prior to the submission of application u/s 560 stating that no assets and liabilities except share capital and P&L debit balance.

3. An Affidavit needs to be executed (Rs. 20 Stamp Paper) and to be notarised (signed by for all directors)

4. An Indemnity to be executed (Rs. 100 stamp paper) (signed by all directors)

5. If there is any unsecured loan, then waiver letter should be submitted.

Timeframe: About 2 months

Source: How to shut down a private limited company in India? | Cogzidel Consultancy Services Pvt Ltd


Apart from this, can you elaborate why you think is the company cheating?

What is the tenure of -

a) You sister's service

b) The company's service or life.

Have they mentioned any reason for closing their operations either on termination letter or have they communicated verbally to them?

You mentioned that they are handed over termination letter mentioning 15th april as last working day. What is the harm in going for last few days to the office?

You can always search for the job eventually and if you get something suitable one can go for the interview. I do not think that the HR would make a fuss over it, knowing that they are completely closing down and it is obvious that the employees will have to look out for new jobs.

Dear friends,
Even for Closing down an Estt./firm termination of employees have to take place and they have to be paid 'Retrenchment compensation' plus other benefits like gratuity, PF/Pension, bonus, leave encashment being full & final settlement should be made as per their eligibility. There is no other alternative to close the employment other than Retrenchment with suitable compensation.

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