Navigating Employee Transitions: Can You Backdate Appointment Letters and What’s Needed for Smooth Shifts?

Queries on Employee Transition and Appointment Letters

There are two queries that I have:

1. Is it acceptable to issue backdated appointment letters?

2. Let's say an employee worked with me for six months while I was working with my father. Now, I decide to open a company of my own and take that employee with me. He/she has started to work with me. Is there a formal procedure that needs to be followed for shifting the employee from one organization to another, and is there any documentation required regarding this transition?

I would be truly grateful if someone could help me out with this.

Regards

It is not fine to issue backdated letters.

Officially terminate his employment in the father company and give him an appointment letter from your company.

Get a letter from the employee for release and employment in the new company.

Maintain a paper trail and follow proper release procedures - like clearances, handing over duties to another person, and then FNF as well.

Hi Nathrao,

Thanks for the reply. So basically, a relieving letter and an appointment letter from the new company should suffice. However, I would need to issue a backdated letter as they have already shifted to my new organization and started working, and there is no paper trail for the appointment or termination. The work is almost the same, so there is no handover of duties or full and final settlement as there was no notice period.

Employee Transfer Between Sister Companies

In most progressive companies, if an employee is shifted from one company to a related or sister company, they are generally given a continuation of service in the new company. If you are following this rule or approach, you should provide a letter to the employee informing them of their transfer to the new company and confirming that their gratuity and other dues will be computed from the date of joining at the previous company.

While, to save money in this context, you do not have to give termination benefits at the time of the employee's transfer, in the longer term, the employee benefits because their gratuity is calculated over a longer period.

On the other hand, you can terminate the employee in one company or ask them to resign and join the other. In that case, they must be given their full terminal benefits, and they join the new company as a fresh employee. If their joining salary in the new company is above the 15,000 limit, they will not be covered under PF. The PF department takes an adverse view of this and considers it a deliberate attempt to avoid PF. Therefore, you need to have complete proof and documentation that the two businesses are not related.

Regards

If you have opened your company under a different name and without any connection to your father's company, you must provide the employee with a fresh appointment. The employee must officially resign from the previous company before joining yours.

Yes, we have created a new partnership with him as a partner. All the employees' salaries are above Rs 15,000, so they were not covered under PF with the previous company, and my guess is that they will not be covered with the new company as well.

Procedure for Shifting Employees to a New Entity

The logical thing would be to get a resignation from the employee and then issue an appointment letter with the new entity. Also, there would be a need to issue a relieving letter from the previous company. Can you please confirm whether I should follow the above?

Regards,
[Username]

Sharad,

Any simple letter will do. There are examples on Google. But you can make a simple appointment letter. Add a line to it saying, "Your appointment is effective from xx-xx-xxxx. However, for the purpose of statutory and terminal benefits, your employment with our sister concern _______ will be included." Or words to that effect.