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preeti-thakur1
Dear Team, I need your assistance in completing the transition process for our existing employees to our new company. As our existing company will close, we have established a new company with new registration for P.F, ESI, etc., while maintaining the same founder and management.

1. Please advise on the required documentation, including the issuance of relieving letters from the existing company and appointment letters from the new company.

2. Regarding the settlement of gratuity upon relieving from the existing company, we need to ensure that their experience is not impacted. Could you provide a draft for this process?

3. It is imperative that we handle this transition ethically and legally, without causing any loss to our employees.

Your prompt assistance is greatly appreciated.

Thank you.

Regards,
Preeti

From India, Noida
PROFESSIONALS AND BUSINESSES PARTICIPATING IN DISCUSSION
Madhu.T.K
Seasoned Ir Professional

Madhu.T.K
4193

The ESI and EPF part is separate and in the respective portals, you have to mark exit of the individual employee and register them as new employee under the portal of the new employer the next day itself so that there will not be any break in service/ non contributory day (in PF). You can continue to use the same insurance number in ESI and the same UAN in PF, though the PF member id will change because for the new establishment the PF id will be different. The transfer of benefits under ESI is automatic that the employees need not do any thing to ensure it but they will get the benefits considering the contributions made by them in the previous company. But in order to transfer the Funds under EPF schemes, the individual employee should transfer request online using the member portal. In respect of unskilled workers, the HR Executives may have to help them to do the transfer but this process is not very urgent but can be initiated after one or two months of contribution to the new company account.

Most important is to get a memorandum of understanding signed by the employees regarding their joining date, continuous service for Gratuity Act, Industrial Disputes Act and some of the provisions relating to Factories Act/ Shops and Commercial Establishments Act which govern the leaves to which the employees are eligible in the new company.

This can be made either individually by preparing an office order highlighting the above or a memorandum of understanding describing the above and making all the employees to sign it as accepted. Be it an individual office order or memorandum, it should state that:

1. The date of joining in the exiting company will be the date of joining in the new company for all purposes.
2. With this transition the seniority will not be affected.
3. There will not be any payment of retrenchment compensation as no employee is retrenched but the service is taken over by the new company as uninterrupted
4. For calculation of gratuity payable under the Payment of Gratuity Act, the date of joining in the existing company would be considered as date of joining in the new company. Therefore, no employee will be given gratuity now.
5. Leave accrued in the existing company will be shifted to the new company and the employees will get credit for the same number of leaves as they have in the existing company in the new company also.
6. With this transition, the service conditions of the employees will not change but they will be governed by the same service conditions in the new company.

The above would justify the transition legally and ethically okay

From India, Kannur
preeti-thakur1
Thank you, Madhu, for your kind assistance. I would like to inquire if there is a need to update the NDA or any other agreements in light of the recent company transition. Additionally, I would greatly appreciate it if you could provide me with the format for the MOU.

Your support is truly invaluable, and I am grateful for your guidance in this matter.

Thank you once again.

From India, Noida
Madhu.T.K
4193

Since the NDA is not part of a service condition, you can collect a fresh NDA from each employee separately. For this the same format shall be used. For taking comcorrence of the employees on the statutory matters you should prepare memorandum with the details given above.
From India, Kannur
preeti-thakur1
Dear Madhu,

Our new company got registered in the year 2021. And there are employees whose joining dates are of the year 2009 and 2010 in our old company and they are currently working with us then how can we show the same date of joining in the new company because this new company never existed in 2009.

Please help me in understanding this, I greatly appreciate your willingness to help.

Thank you.

Regards,
Preeti

From India, Noida
Madhu.T.K
4193

For that a memorandum of undertaking would serve the purpose. A memorandum of undertaking is a declaration as well as a settlement between the employer and the employee of the date of joining, service conditions and many other matters that you and the employee agree. You should have done it when the transition took place but it can be made now also.
From India, Kannur
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