Umakanthan53
Labour Law & Hr Consultant
Nathrao
Insolvency N Gst Professional
Anand Anil
Deputy General Manager
Charan S
Head Hr
HR OLAKUNLE
Hr Executives
+1 Other

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Hi Seniors,
I am working as HR with an IT company in Noida. The founder of the organisation wants to open a new company with same staff and management. All the employees will be taken in the new organisation. I need to know what kind of HR documents need to give to the employees. Shall I ask employees to resign existing company and issue a fresh appointment letter? We want to take care of employees right as many of them are going to complete 5yrs. with the existing company so we will pay them gratuity.
Need your suggestion please help.

Hi, it is more of re-branding but however is key to be professional in one job , i advise you let them fill the exist form and take the fresh, dont forget the logo of the new organization, possibly management reporting lines may change from the previous organization. so, let them fill the exist and reengage them as new staff for proper documentation. With the following document:
1, Persona Bio Data form
2, Assumption of Duty
3, Academic, personal reference for HR Auditing
4, Guarantor form and issue them employment letter on new letter head paper

Dear Riya
As a HR professional undermentioned things need to be done urgently
1. Gratuity to be continued. Some employers do the same to avoid the liability
2. New PF code/ ESI code if applicable
3.. Service conditions remain same and must be intimated to Labour authorities.
Regards
Charan

Please check the status of transition i.e status of person(s) having over all control over the business, type of business , any new director / partner pumping more money to divert the business of company. From HR point of view it need to be established whether it is going to be a new business from the employer (Director(s) / financial and type of business point of view. If all says new then its new and previous chapter need to be closed prior to opening of new chapter. Else if it is a simple resolution for change of name of business from Income Tax Act / companies Act point of view then keep a copy of the same and inform respective labour departments for update of their office records regarding change in name.
Hi Riya,
Please check first Partner/director status in old and new company. if they are the Same then Previous company employees statutory liability can be carried forward and employees benefit remain same as per previous company policy. In this case you have to issued a new letter to every employee/ or circulate a mail to all for the same.
Recently i had done the same company merger so i can tell each and every fact points wise.
we are as a consultancy company provide advisory and other service .
you can call me on my no 9599342841.

Dear Riya,
There is no mention in your post about the constitution of the existing Company and the proposed one. If the existing Company is a company registered under the Companies Act,1956, it can start or acquire another company as wholly owned subsidiary (WOS) in which case the services of the employees of the existing company can be transferred to the new one, I think.

Thank you all for your valuable suggestion.

Giving a clear picture of the situation..

Both the companies are registered under Company act 1956. Management don't want to show any link between both the companies..no acquisition, merger, business transfer etc.

The structure is like, 'Mr. R' runs a company called 'ABC' and has a developed a software product, now due to some (unknown) reason Mr.R wants to open a new company 'XYZ' with same management structure. XYZ will start his business with same employees' team.Every employee will be at same position which they hold in 'ABC'.

My points of concern are:

Appointment letter: with same designation and no probation period(as they are confirmed employees of ABC).

Leaves: what to do with their leave balances with ABC? can it be credited to their leave account of new company? What will be its impact on company's liabilities in accounting book ? Note: Management and some employees are not in favor of leave encashment.

PF : Old company was exempted from PF but new would be registered under PF compliance. So i think this is not problem.

Gratuity : Management is paying employees gratuity as per the calculation till date with their full & final from 'ABC'. Management is paying to every employee whether they are eligible or not to make them feel good.

Please through some light on these points and advise. also let me know what other things need to be take care of from HR's prospective.

I am sorry for this long post but I need your support.

Thank you.

From your further inputs, Riya, I don't think that there is any problem either legal or otherwise in the proposal. But the only point of concern is the willingness of the individual employees. Therefore in respect of the willing employees transition can be facilitated on the following norms:
1) Appointment Letter: As suggested by you.
2) Leave: As the arrangement amounts to termination of employment by resignation in so far as ABC, the leave at credit can be encashed. Since the encashment of leave at credt is one of the items of FF Settlement, the individual preference has no room in it.
3)P.F: O.K
4) Gratuity: ok

Things are much clear now

Since the employer is ready to clear past dues salary and gratuity what to ever is due. In this case it has to be amount due against gratuity irrespective of length of service , it has to be like voluntary payment.

Leave encashment for privilege / earned leave is to be made against due till the termination of previous employment.
Other leave can be given to employees as per new leave rules.
Employment certificate of previous company can be issued to all existing employees.
New employment letter can be issued in the new company. However for the probation period clause. We need to understand the purpose of probation period. It is nothing but an evaluation period for both employer as well as of employee, I strongly believe that those who are regular and confirmed employee in previous company may be given employment as confirmed employees or without probation clause.New recruits can be taken as per rules.This will help organisation in retaining existing talent.
EPF facility is to be extended in case of new company as apprised by you.

In view of above , i believe as far as HR is concerned one should be positive enough to accept company goals under given circumstances.

Regards

""Appointment letter:""
Fresh appointment letter is needed-designation,pay,resignation/exit process etc
""Gratuity ""
Previous service should be counted for working out gratuity.
Specific mention in appointment letter to indicate that previous seniority would be protected and counted in new company.
""Leave encasement""
Suggest close previous chapter of leave which is accumulated and pay off employees and start afresh for employees in new company.
Off course ,willingness of employees will be needed writing along for all changes.

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