The basic thing to be done while making such changes in the management or constitution of the company is to ensure compliance as per section 25FF of the Industrial Disputes Act. The said section says that no employee shall be transferred to the new company without paying retrenchment compensation as prescribed under section 25F of the Act. However, if the service conditions are not altered and if the wages, and other service benefits are fairer than the earlier company there is no need of paying compensation but the services of the employees shall continue without any break in service. Unless otherwise settled and in the absence of any option given to the employees as to whether they would like to join the new company or not, and in the absence of any payment given to those who decided not to join the newly formed company as retrenchment compensation, all the employees are deemed to have joined the company on the date on which they joined the former company.
Second issue is that when the employees in the partnership firm were transferred to company, they closed the PF and allowed the employees to withdraw the PF and started new PF for them. It is okay that the newly formed company will have a new PF number, but what should have been done is to transfer the old PF accounts of each employee to the new ones by means of transfer forms, ie, form 13. For this workers cannot be blamed. This was a managerial adjustment.
In view of the above, I find that those who have completed 5 years service from the date of joining in the partnership establishment will be eligible to gratuity.
Madhu.T.K