Contract Termination

Dear Seniors,
We have few employees in our payroll. We have a company with X name, now we have opened another company with Y name and these employees have been moved from payroll of X to Y company.
Here it is to be noted both the companies have a different business line and different identity.
My question is shall we terminate there contract of X company before giving them new contract of Y company.
What should be the reason specified?
Are there any legal implications
As per our contract we need to give notice period as well.
Kindly advise

Hi,
Notice period is a must in case of termination of contract. However, if discontinuing the contract is a mutual decision, then both parties may sign a release letter.... You may then make a new contract on the rolls of company Y.

Addission to Shefali, Contractor has to cancel his liecence from Govt.Labour Office from which contract liecence was issued and tht certification of contract cancellation, has to be submitted to organization.

Here you need to let us know more info on this.
Is this change because of Merger/acquision/consoilidation?
If yes they only need to given the transfer letter saying that now you will be known as employee of Y co and your all the tearms and conditions of employment will remain unchanged. You can not move employees from one Company to another till they agree the terms and condition of the new Company.

This is not because of merger/acquisition/consortium. The company is into different business lines. Now they have separated their business lines and formed different company.Here condition iswe cannot show that this a sister concern of previous company.Both companies have different identities.