Is the sister company in the same state or other . if in another location then need to provide all the eminities for transfer employees such as
Salary as the states cost of living.
Transfer of his household material/ family one time fare charges will be on employer.
Issue him a new offer letter under Sister Concern Letter Ahead.
Ensure you collect the resignation letter for parent company. Now if management wants to have continuity of the service for the employee with same start date as parent company, it needs to be accounted with proper documentation which I guess the CS will guide you on this matter depending on the model of business enterprise your parent company and sister firm is registered as.
Ideally to avoid any such legal problems and other issues connected with it, its advice to seek resignation and issue new appointment letter.
Your parent company has to nothing to do with his appointment. Remember, there are legal liability.
The clause you mentioned would be used against employee if he/she refuses to such transfer. However, due to certain legal implication, it is required to issue a new offer letter under the new firm due to various statutory requirements and certain legal liability clauses.
Besides, the entity/understanding in which both companies have been formed and registered between them matters, hence it always advised to involve CS in such matters. But most of cases I handled CS and Law personnel's have suggested to go with new offer letter, if the service of employee in subject is less then a year or so.
Yes my query is that whether I should issue a new offer letter to the Manager as he has been promoted and due to this his roles and responsibilities have been changed however, the sister concern is a small unit with 4-5 employees at the moment and my parent company is holds a strength of 50 employees.
The manger has still not resigned from the parent company and my boss wants him to shift to this small unit. So basically he will be the only Sr. Manager for this sister concern.
do take this start performer into confidence since he might be a tad uncomfortable going from a large company to a start-up. Do note that he would suddenly be losing his EPF benefits and such like. So you and your CS will need to sit with him, approach his concerns (if any) with transparency and aid him to take the decision that your company wants him to take. Do remember, it is in the company's interest you want this shift, to make him agree to it - and feel good about it, is going to be your task.
Let us know what happens.
All the best to both of you.
My inputs are only to help Sadaf to deal with the situation since it is the comapny that should decide whether sister concern is an indpendent unit engaged in a different business line or is it part of the Parent unit, formed to supplement the business of parent unit in which case there can be transfer to the sister concern with promotion.If there is no issue of independent units and it is immeterial, then as you said, it is advisable to treat it as a mere transfer to protect continuity of servcie and other benefits llike P.F and gratuity to reawrd an efficient employee . I agree with you.
Sister concern has not been defined in Indian IT act and it often is used for such entities which has same directors of the parent company as stake holders.
I am not sure, if the sister concern in question, is a legal entity at all. In such case, there is no need to issue fresh employment letter. One can issue promotion letter with transfer order to the relevant department/wing/sister concern. Necessary changes in wage and attendance register can be made.
If the sister concern is a separate legal entity, in that case, you have to follow complete separation process as per relevant rules and then follow complete joining and induction process in the new entity.