How to Protect Employee Benefits During Intercompany Transfers: Seeking Agreement Templates

We are planning to transfer a few employees from one company to another company (two separate legal entities) within the group. We would like to protect the service benefits of the employees and hence we would not like them to resign and re-join. We are also aware that we cannot transfer an employee from one company to another without his/her consent.

Shall be thankful if someone can share the tri-partite agreement for formalizing such transfers between two legal entities.

Regards,
Srini Ramesh

Dear Srini Ramesh,

If an employee is being transferred from one group company to another, there is no need to rejoin him. His balances such as leaves, dues, etc., can be directly transferred to the group company. Normally, in an appointment letter, there is a clause of transfer. If your company issues the same, please refer to it.

Before transferring an employee, you need to take him into confidence and justify the exact need for your action and the benefits that the employee will receive. Also, you need to seek approval from his Head of Department.

Lastly, you need to provide a letter of transfer on the letterhead to such employees signed by the Head HR/Unit Head, specifying the date of the transfer. A received copy should be filed in their Personal File. The Personal File should be sent to the company where you intend to transfer your employees so that a smooth transfer can take place.

Regards,
Gurpreet Singh

There is no need to have a separate tripartite agreement since many group companies include the intercompany transfer clause in their offer of appointment letters, and this clause binds all employees.

Regards,
Ravichandiran

I agree with you that the appointment letter has a clause regarding transfer. However, making such a decision without taking the employee into confidence can lead to industrial relations (IR) issues.

Regards,
Gurpreet

Consideration of Group Company Status

Both companies are separate entities, but the director is the same. In this case, do we consider them as a group company and not require the formalities of rejoining with the other company?

Each company has separate registration, accounts, and other statutory functions. In this case, should we consider them as a group company if the director is the same?

Additional Points from the Discussion

- No need to issue any appointment letter if your Board of Directors (BOD) remains the same.
- No need to do any formalities regarding the joining of the same.
- No need to separate them and rejoin again.
- No need to issue the transfer letter and no need to initiate the transfer formalities.

You can put them on deputation and then shift them after some time for a long term.

If the appointment letter includes a transfer clause with a clearly mentioned intra-group transfer point, then you can simply issue the transfer order to the employee, depending on the normal HR practices of your organization. Before proceeding with the transfer, consider the following:

1.  **Labour License Strength:** Check the labour license strength of the company to which the employee is being transferred. If necessary, update the labour license strength.

2.  **PF Code Verification:** Verify whether the PF Code of both organizations is the same. If not, you will need to put in additional effort to transfer the PF case as soon as possible.

@Deepak: Regarding deputation cases, I do not support them, as the company planning to transfer indicates a long-term strategy. Deputation for 2 to 3 months is manageable, but for longer periods, you may encounter statutory issues (e.g., an accident occurring to an employee after deputation or an Enforcement Officer Inspection). That's my perspective.

Regards,
Ratikanta Rath

Intra-Group Transfers and Employee Benefits

Intra-group transfers can be effected by issuing a transfer letter specifying that this shall be deemed as continual service and all the benefits, terms, and conditions remain the same. In cases where separate EPF/ESIC registrations are in place, they need to be transferred as soon as possible. Resignation or rejoining shall not be required.

Regards,
Anil R

Kindly send a format of an intercompany transfer letter. The employees need to be transferred from the parent company to the sister company.

Regards,
Bhuvna Delhi

Hello Everyone, I had been working with a multinational company at X place during 2015. On September 27, 2015, I received a transfer letter to move to another site. I would like to mention that at that time, I was in a temporary payroll role. I received my transfer letter by email to move to Y place. I started there on October 4, 2015, and was given a new appointment letter. Interestingly, I had already received an appointment letter in 2012 when I initially joined the firm. Despite having transferred multiple times before, I never received an appointment letter at that time.

Now, the question arises: if I resign from the company, will the company consider me their employee from 2012 or from October 2015?

Dear Kumar,

If you have been continuously employed with the same employer, regardless of the location, and have received your salary from the same employer, you are eligible for the original date of joining, which is in 2012.

Please let us know if your service was transferred with continuity of service or not. Kindly provide relevant details for a proper reply.

Thank you.

Dear Bhuvana Prakash,

Have you mentioned the transfer to Group Company clause in the appointment letter? By virtue of transfer, will there be a change in the employee's nature of work, remuneration package, change of location, etc.

If an employee has not received an appointment letter from their previous company and has been transferred, in such a case, which letter should we give to the employee?

Regards,
Mghana