Proprietorship Company Now Pvt Ltd- Change Offer Letters Or Just A Letter Stating The Change Is Enough? - CiteHR
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The company i am currently working in was on proprietorship until last month. We have now become a privately held company, the company name & management is the same.
I want to know if i need to give a new set of offer letter to all the employees or a letter stating the conversion will suffice.
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In my view, the company name may be same, but being registered as a limited company, the words "Pvt Ltd." would have got added to the company name. Further, it is now a separate legal entity as compared to the Partnership firm.
Hence, it may be necessary to give fresh appointment letters to the employees, with continuation of service benefit.
Dear Shobika
Fresh appointment letters will lead to fresh appointment of the employees and they will loose their previous service benefits.
It is better if company adopts a resolution to take over all the liabilities of the employees as they have taken over the assets and liabilities of the Proprietorship firm.
V K Gupta
Hello Shobika,
As per my knowledge you have to issue a new offer letters and let them sign on the new employment agreement also because the entities are different. Employees gets the benefits from the new entity and if you are providing PF benefit it can be transferred and they can with draw if the employees want money by filling the forms 10(C) & 19. For registering your new entity for PF contribution you need to submit Form-09 from the company side.
Can someone please give me the inputs to prepare the holiday calender for a partnership firm as per the government rule
respected sir/ madam
i am studing msw hr 2 years in madurai institute of social sciences at madurai
i have one doubt for empolyee provident fund (EPF).
1. A factory was covered under the EPF Act and has an office of 5 members. Even the factory was closed but the office continue to be governed by EPF Act
a) True b) False
2.A part time employee engaged in the work incidentally connected with the work of an establishment will be treated as an employee under EPF Act
a) True b) False
3.An employee have put 9 years and 6 months of service and reached the age of superannuation. He can eligible for
pension benefits ?
a) True b) False
if you tell a or b plz give explain detailed
Dear friend,

First of all your erstwhile 'firm' cannot be called as a 'Company' it was a 'proprietorship Firm' and now incorporated as a Co. (are u sure whether it is regd. under the Companies Act,1956 or converted to a 'Partnership Firm' make sure about the status of the new entity.). However whether it is a Partnership firm or a Regd. Pvt.Ltd.,company necessary conversion or creation & compliance have to take place. But, for your knowledge sack there is a provision for creating an One man/woman Co. under the Companies Act without being either a Partnership or Pvt/Public Ltd.Co. (pl.see the attachment for more knowledge on One person/Man Co.). Presuming that the new entity is a Pvt.Ltd. Co. your auditors/consultants will take care of the legal compliance wrt to the assets & liabilities & Companies Act provsions, whereas reg.staff you may consider the following.

- It is advisable to regularise the services of employees on roll/continuing to the new co. For this you can adopt modality from one or more of these discussed here-

1. You have to obtain a 'Willingness declaration' (appropriately giving options to you all either to continue or sever) from each and every one of your employee wherein the terms and conditions are clearly spelt out. This will ensure there is no compulsion on either side. Alternatively -

2. Issue a fresh letter ( offer &/or appointment letter) wherein mention clearly the terms & conditions about the past service and fresh conditions obtain their acceptance 'without prejudice' in writing. (Probably you have to settle for those 'unwilling' , if any).

3. Or you may draft a bipartite agreement describing the events and future service conditions which will have to be signed by all concerned & willing,issue a copy to all the signatory.

4. If you are a unionised co. the agreement can be executed (tripartite) with the recognised/authorised Union witnessed/approved by the ALC. and circulate the contents by issue of a public notice to all concerned under proper acknowledgement.

5. If you don't wish to continue with the past legacy, prepare for a fresh arrangement with proper settlement for the past services to start with a clean slate. (This may not be preferred as it might affect benefits from EPF/ESI, EPS, Gratuity and others which are based on length of service as a criteria.

Apart from the above you have to have fresh Regn.under Factories Act, ESI, EPF, VAT/Excise, PT, Labour/Shops & Estt Act. etc.

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Change of form of the organization is material as far as legal compliance under various laws, especially labour laws, is concerned. But that is another issue that needs to be discussed separately anyway!

From HR point of view, I see your question as whether this change from sole proprietorship to a PVT Ltd company will impact the employer-employee relations or the terms and conditions of employment. Usual experience is that under the sole proprietorship organizations the relations are cordial, more informal, more paternalistic permitting little bilateral or multilateral communications, consultations and a hierarchy that runs parallel to the defined hierarchy!

One fundamental purpose to change the form to the Pvt Ltd organizations is the GROWTH motivations aided by new technologies, products, services etc. It could also mean more people coming in to work for the company. This means the organization is moving from "informal" to "formal" way of doing things.

To that end it is always safer to remove any ambiguities, unstated assumptions, undisclosed reporting relationships (if there be any) and leave NOTHING in the domain of Employer_Employee Relations unstated and therefore liable to various convenient interpretations by vested interests. The organization must become more transparent.

ESI, PF and other registrations will form a small and negligent part of the task (albeit very significant anyway). Culture, terms and conditions of employment, Defined rules and procedures, developing a Policy manual for each function etc will be the critical aspect involved in this transformation.

If you state focused areas of concern one would be able to answer in a more meaningful and helpful manner!



October 18, 2013

Mr Hasrtinmuthu The answer to your query 1 and 2 is 'YES' and for query 3 is 'NO' Varghese Mathew HR/Labor Law Adviser Trivandrum 9961266966
The company i am currently working in was on proprietorship until last month. We have now become a private ltd. company, the company name & management is the same.
how our employee engaged with our new company without discontinuing their previous service?
The company i am currently working in was on proprietorship until last month. We have now become a private ltd. company, the company name & management is the same.
how our employee engaged with our new company without discontinuing their previous service?
pls suggest.
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