Dear Seniors My query is: When a company 'A' acquires company 'B', can company 'A' fire the employee(s) of company 'B' in the name of downsizing. Is this legal. Regards Parikshit
From India, Gurgaon

An employer may dismiss an employee without any notice in any of the following cases:

If the employee assumes a personality or a nationality other than his own, or has submitted fake documents or certificates.

If the employee was appointed under probation and the termination happened during that period or at its end.

If the employee commits a mistake causing the employer a big financial loss, provided the employer informs the labor department of the incident within 48 hours.

If the employee violates instructions relating to safety in the place of work, provided those instructions were written and displayed in a permanent place, and the employee has been informed of these instructions orally if he is illiterate.

If the employee fails to carry out his basic duties as stated in the contract and continues to do so inspite of a written interrogation and a warning that his service will be terminated if he repeats his actions.

If he discloses a secret of the establishment for whom he is working.

If he is conclusively convicted by the concerned court of a crime involving honor or his honesty and public moral.

If he is found drunk or intoxicated by drugs during working hours.

If he commits a physical assault on the employer or manager or one of his colleagues during work.

If he becomes absent without a legitimate reason for more than 20 intermittent days or more than 7 continuous days within one year.

From India, Mumbai
Dear Parikshit,
In the case of acquisition of one Company by another, certainly there would be a clause in the acquisition deed regarding the employees of the acquired Company. If nothing is mentioned and the employees are permitted as usual by the Acquirer, it implies that their services have been acquired along with other assets and liabilities and as such there cannot be any alteration in their service conditions without observing the provisions of Law governing their service conditions. If any thing is mentioned in the acquisition deed as to the specific no of employees to be continued in service after acquisition and then the liability to compensation rests with the vendor. But, I think your question presupposes the transfer of the services already took place.

From India, Salem
After acquisition of company B by company A, the service conditions of the employees of company B should be guided as per the memorandum of understanding between the two companies and subsequent notification issued after the approval of the Appropriate Authority.
From India, Bokaro
I was HR head of a state PSU in kerala which was acquired by a JV Co between India and another Country.I was involved in the process of this takeover from HR side.The process involved were as follows:

Govt of Kerala after many discussions issued a GO transferring the unit to the JV Co subject the agreed conditions

There was an agreement of handing over/taking over between the two entities.

There was a settlement with the unions of employees and the two companies.

The JV issued order of absorption to all the employees subject the agreed conditions in the agreement and settlement.

All employees gave an undertaking agreeing to the above conditions.

In the above documents it was agreed that:

The previous service of all the employees will be protected for all legal benefits.

Rate of PF contribution will be on actual salary.

All employees will be given a wage revision from the date of take over.

All the fringe benefits received in cash will be continued

All other benefits which had a statutory binding will be continued

There was clarity on every aspects of employees and employers concerns.

Varghese Mathew

From India, Thiruvananthapuram
As a matter of norm, normally, majority of top management team members can expect a pink slip sooner or later. Some of the weak wickets, low performers, over smart stuff, trouble makers need to worry. Ultimately, it would be a Business Call, despite legal hassles. Cheers !! Diwakar
From India, Bangalore
Dear Seniors and HR
Presently am heading the training division. Though I have 28 yrs of experience my services has not recognized and have done a base work to come up profit center as am head. But management is not willing to contribute their support if i ask any help like advt cost reduction etc but they are disturbing me too much. Am not able to quit my job due to personal reason. Pl suggest that how to re-approach the management for this issue. personal discussion, mail discussion over but no fruitful result. i heard internally that those who hv completed 2 yrs they will treat like this. pl help for the suggestion

From India, Chennai
Dear friends,
As far as I know, in any Mergers & Acquisitions, the Acquiring Co. always try to retain their option, a clause in the Deed, a discretion of having their own manpower either to retain some or look to market and/or both. And an employment is a contract between the employer and employee with a termination clause, of course with a compensation package. Therefore there is no right to permanency except the compensation when separated. An article on this is attached to give a general idea on M & A.
Protect Yourself In A Merger -

From India, Bangalore
Dear All,

As per the section 25 FF of ID Act 1947 in case of any change in management by whatsoever means, workmen of the exiting entity should be service with Notice and shall be entitled compensation as if he has been retrenshed in terms of section 25F.

However if the employees/workmen has been transfered with similiar or better benefits n terms of service condition, gratuity etc than no notice shall be given.

"Where the ownership of management of an undertaking is transferred, whether by agreement or by operation of law, from the employer in relation to or that undertaking to a new employer, every workman who has been in continuous service for not less than one year in that undertaking immediately before such transfer shall be entitled to notice and compensation in accordance with the provisions of section 25F, as if the workman had been retrenched:

Provided that nothing in this section shall apply to a workman in any case where there has been a change of employers by reason of the transfer, if—

(a) the service of the workman has not been interrupted by such transfer;

(b) the terms and conditions of service applicable to the workman after such transfer are not in any way less favourable to the workman than those applicable to him immediately before the transfer; and

(c) the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer.]

So, the written consent of employee shall be mandatory in absence of written consent and acceptance there shall be industrial dispute.

In case employee don't want to transfer to new establishment or management, he shall be entitled to all compensation as if he has been retrenched from services. But it shall be subject to that employee should have completed 240 days as continous service in establishmen of transforer.

Though the liability and other compensation payment from management point of view has to be inserted into agreement to seting out liability of both parties.

During M&A exercise, its an important point to be taken care.

As stated above, an acquirer has to ensure continuity of service. The benefits that any worker is entitled to are linked to the total number of days the individual has worked in the organization. For example,a workman is entitled to receive gratuity after completing five years of continuous service. Section 2A of the Payment of Gratuity

Act, 1972 defines continuous service as an uninterrupted period of an employee’s service.

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