Facing Forced Payroll Shift to Third-Party: What Are Our Legal Options?

Hi, I would like to get suggestions regarding my subject above. I am working on-roll with an Indian Company "C" based in Delhi while I am located at the M.P. branch for the last 10 years. "C" Company was taken over by the MNC French Company "A" in 2008, which had already taken over the Indian Company "B" in 2001. Therefore, "B+C" Company now belongs to the Group Company "A." The "D" Company is the distributor of products for A+B+C Companies. The product I was handling in "C" Company was decided to be moved to "B" Company along with the entire team of 40 people. "B" Company took over the product but shifted the entire team to the "D" Company (Distributor) third-party payroll (off-roll) by paying 50% of the manpower cost for the first 6 months. Afterward, the "D" Company will become our Employer, and we will handle the same product there. However, the "D" Company reserves the right to terminate any employee after 6 months as per their agreement with "B" Company.

The entire team of 40 people does not want to join the "D" distributor's payroll off-roll due to the following reasons:

1. In the future, there will be no employment liability from A/B/C Company.
2. If "B" Company took over the product, the team should be on "B/C" payroll, not on the distributor's payroll.
3. If employees continue to handle the same product, the payroll should also be on "B/C" payroll.

The company is forcing the entire team to switch to the third-party payroll or leave the company.

Kindly suggest the legal process.

Thanks! Dinesh

Mergers and Acquisitions: Employee Rights and Obligations

In today's business scenario, mergers and acquisitions are quite common. When conducting such transactions, the merger and acquisition agreements of the company need to be carefully reviewed.

Typically, in this process, the parent company may opt to terminate the employment of an individual in the company where they were originally appointed. All dues owed to the employee should be settled, followed by a fresh appointment with the terms and conditions prevalent in the new company.

If there is no break in service and a new appointment is issued with updated terms and conditions, the original terms and conditions of the initial appointment will remain valid. If the new company you are transferred to does not adhere to these terms and conditions, you have the right to raise a dispute under labor laws with the appropriate labor authority.

Regards, Rameshbg

10 years is a very long time to be with the same employer.

Also, you might have to consult an actual lawyer to know the real alternatives available.

As this is a case of merger, the company can take this decision. Also, if the team resists, then the company can pay you the notice period as per the appointment letter and cease the employment. There is no law that states that if the product has been taken over, the manpower should also be taken over.