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dear seniors our company wishes to close as the owner is aged.. what is the settlement rules for the employees? please give your valued information.. thank U Ramesh
Have you completed 5 years contiinuous service in the same company if yes you are eligible for Gratuity Otherwise No.
Rather simple.. the number of people who have worked for more than 5 years in the company as employees will have to be paid their earned gratuity.. all other statutory payments due to all your people will have to be settled - including, notice pay, leave encashments, EPF etc.
try to be proactive and supportive of the people you are letting out - be detailed in giving them their FnF, service certificates, PF details, and all such relevant documents. Slip ups will only create avoidable long term complication and heart aches
Remesh , You have to pay retrenchment compensation also to the employees in 'workmen' category u/s25FFF of the ID Act. Varghese Mathew 9961266966
From practical point of view if the employer is closing down a healthy company he can as well reward his employees by paying both Gratuity and retrenchment compensation irrespective of their eligibility, otherwise strictly going by law, other learned members have already clarified the point.
If the business can be run by the experienced employees, why not try it out ! Run the show ourselves, Discuss amongst yourselves, form a management committee and prevail upon your aged owner to pass on the ownership to the committee. Certainly there could be a brand name or image in the market. Exploit it to your advantage... Introduce new products make it modern and updated !!
Best wishes
Very well said Mr Sundaram.. The old man can continue to retain ownership if he chooses to, but pass on the management to professionals - work out the composition and revenue share.
In this case if we pay the Gratuity then we also have to pay retrenchment compensation under ID act? Both calculation same. Should we pay both benefits to the employees. It may over buden to Employer?
Yes you have to pay both gratuity and retrenchment compensation as per Gratuity act and ID Act respectively.
Gratuity is to be paid to all employees who completes 5 or more years of service calculated as follows;
monthly salary /26*15*No of years of service.
Retrenchment compensation is to be paid only to workmen who completed 1 or more years of service calculated as follows;
15 days average wages* No of years.
In addition you have give one months notice to workmen or wages in lieu there of.
If the workmen submit resignation you do not have to pay Retrenchment compensation.
Varghese Mathew
As per the law, all the people have completed the five continuous years in the company as employee are eligible for the gratuity.
The other thing that I want to suggest is thatl, if an owner is aged, closing the running company is not the solution but the owner should hand over the responsibilities to one of the trusted person who can run the company successfully.
As of now, Ratan Tata is aged now but he can not think of closing the company but to handover it to a eligible and trusted person as there's so many people are employed by his companies.
It's also not the matter of small or big company but thinking about the future of people who worked for you for so longer whether it 2 people or 2 crore or more.
Dear Sir,
I am working with a company since 2011 now due to financial crunch company is sinking and under control of lenders. All top officials from HR also left. I am not sure that while leaving the company I will get gratuity from company, though the fund was made . Is there any legal actions to be initiated. One of hard part of it, company is also referred to NCLT.
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