Navigating Employee Transfers: Can Gratuity and Benefits Move to a Subsidiary?

Dear HR's,

My case is a little complicated. I am working in a reputed company, and we have our subsidiary company registered with the Shops Act. Now, our subsidiary company is taking on the employees from the parent company, subject to their resignation from the parent company. We have already accepted the deal and are relieving our employees to our subsidiary company.

Questions Regarding Employee Transfer

Now, my questions are:

1. Can these employees have the transfer of gratuity from the parent company to the subsidiary company?
2. Are they eligible for any other benefits from the parent company?

Both companies have different HR policies and salary structures. Kindly help in this matter.

With regards,
SANTANA

In an unlikely event of a dispute, there may be an issue. If the relationship between the parent and subsidiary company is strongly established, then the practices of obtaining resignation from the parent and taking the employees on subsidiary roll become a questionable issue. This can happen if:
a) Any employee is losing Gratuity, Seniority
b) The benefits/earnings in the subsidiary company are lesser than those in the parent company.

However, if there is continuity of gratuity and service with all the benefits of the parent company being given in the subsidiary company, there will not be any issue. The structure of benefits may differ. So, in the legal interest, it is better to provide continuity of gratuity and other benefits as might have existed in the parent company.

Kind regards,
Dayanand L Guddin

Sir, We are transferring a few employees to our subsidiary, which hasn't been registered under PF, and all these employees' PF has been deducted for the past 3 years.

My Questions Are:

A. Can I deduct PF and pay from the parent company number until the registration is in place?
B. Can we stop their PF deduction, even though employees' benefits are being affected?
C. Is there any provision under the PF Act that provides umbrella cover to a group company and its subsidiary to transfer employees without facing any compliance issues, similar to Tata, Bharti, etc.?

Your timely response would be highly appreciated.

Regards,
Niks

Provident Fund Registration for Subsidiary Companies

No, there is no provision in PF. You have to get a new registration number for the subsidiary company and deduct from their salaries and pay the same. You can transfer the PF amount from the parent company to the subsidiary company account by submitting Form 13. Additionally, if you paid PF from the parent company account, the subsidiary company will not get income tax benefits as per IT rules.

If you want to know more about PF, see the link [KVJ RAGHUNATH: THE EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952](http://epfa1952.blogspot.com/2010/06/employees-provident-funds-and.html).

Regards,
KVJ Raghunath
([Search On Cite](https://www.citehr.com/results.php?q=KVJ+RAGHUNATH) | [Search On Google](https://www.google.com/search?q=KVJ+RAGHUNATH))
[Phone Number Removed For Privacy Reasons]