Transfer From One Company To Another Within The Same Group

Dear Seniors,
1)what are the areas we should keep in mind when we transfer employees from one company to another within the same group.
2) Here the situation is like this : we have two companies named A and B . Company A is a joint Venture and company B is Fully Owned. we would like to transfer employees from Company A to Company B which is fully Owned. Then we will Second the employees who are identified with the Company B, so what are the things to be kept in mind under such an action.
Regards,
Ritesh

Dear Tagplus
Regarding your query
Please take care about The A & B companies have registered under EPF,ESI, Gatuity if not please do not transfer them from A to B you will be liable to pay the ESI/EPF dues as per the Statuotory norms
And those who are transferring from A to B please issue reappointment letters based upon the which company you are going to do
The Attendance registers and all other statutory records should be maintained
Need more clarification pl contact
Laxmi
9866917232

Dear Tagplus,
Even though the employee is being transferred within the same group, the companies are different and the policies governing the companies may be different.
So ideally the employee should resign from the first company and clear all his dues to the company and viceversa.
And he can join the second company as a new employee.
An internal communication can be maintained referring the employee as internal transfer but for ease of system, policies and calculations this would be better.

Well; all this strategies are fine; but what happens to the Gratuity and gratuity period ???
Why can not every company do this by floating a new, fully owned company, every four years and keep " transferring" the employees in thee manner discussed; so as to ESCAPE any liability under the Payment of Gratuity Act forever ???
I would like to know the answers.
Warm regards.

Dear All,
Related with transfer within thier sister concern, gratutity will not affect, continuity of service to be same.

Hi Ritesh,
I have handled so many such cases in my career. I assume that these two companies are two separate legal entities.
You can follow as under:
1. Give the fresh appointment letter and enter into the fresh employee contract,
2. Resignation at earlier organization with all F&F,
3. Ensure that employees are compensated for any loss due to policy change.
4. In employment contract you can mention that there date of joining (original company) will be considered for retrenchment.
5. Gratuity also can be settled or gratuity fund also can be transferred from one company to another.
If you want to encourage employees to take the transfers and if you use these transfers for career and talent management purpose, my best suggestion is to harmonize HR policies across the group so that your future transfers are smooth.
Thanks & Regards,

Please explain why you think so ?
They are independent companies and the employers are different.
So how can u say gratuity will not be affected ? Under which law is the rule that the service will continue when the company is changed ?

Raj

This can very well be done by companies

In fact people do such things

Of course you can not make a new company every 5 years as the record and history will change. Buy if u have 2 companies, every 4 yers you can ask people to resign from one and come to the other,

However, then they can not attract good quality employees.

The general practice I have seen in good companies is to have employees in a holding company and send them on deputation to subsidiaries. That way the liability of gratuity and statutory dues stays with the holding company even if paid off by a subsidiary. The companies give a letter to the employee clarifying that the deputation will not be considered as break in service with the parent company and will be counted as such for gratuity, superannuation fund, increment, grades and seniority.

In cases where the employee is transferred to another subsidiary permanently, a similar letter is given by the new company to the employee stating that his services will be deemed to have started from the date when he joined the original company.

That is what best practices say.

It is unfair to,ask the employee to resign and take his settlement. The employee is a loser in a lot of things, not only gratuity.

Ritesh
you cannot loosely or casually apply the word 'transfer' to any process of procuring employees for a company since evry process has it's wown legal imlications under labour laws. So be clear about what process you want to adopt, keeping in view the suggesstions given by the members.
B.Saikumar
Mumbai

Ritesh
You may affect the transfer/ secondment using any methodology that is mutually consented by the two managements and is law proof. There are various methods to do it ( all methods should have separation from A and Appointment letter for B even if you have a Group Mobility Policy)
The important issue is to ensure that maximum interests of the employees under 'transfer' should be protected by giving them benefit of continuity of service.
Particularly for gratuity and earned leave. One way of doing it is to transfer prorated gratuity amount and EL amount to B.
Pl discuss if you need more clarity.
Ashok
8587804557