Navigating Company Restructuring: Should I Issue New Appointment Letters to All Employees?

I work in an IT company under the HR Department. The management has decided to issue a new appointment letter to every employee under another company. For example, all employees of X, Y, and Z are appointed under X company. There are also other employees under Y and Z companies. The X company is going to be abolished, and some employees will be under Y, while some will be under Z company. Should I issue new appointment letters to all the employees? What will be the right way to solve the problem? Please suggest to me.

Please provide additional information, such as the age of your company X and its employees, the reason for the closure of company X, whether Y and Z companies are affiliated with company X, and the statutory regulations under which company X operates or is registered with PF, ESIC, etc.

The services can be taken over from X company with continuity of service and the same terms and conditions. However, you can also consider offering a full and final settlement in X company and then issuing a fresh appointment in another company. For this, you should request the employee to submit an application for employment to the new company, clearly stating that they have received their full and final settlement from the previous company.

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Dear Saji,

Thank you for your reply and query. The company is 8 years old. However, in the last two years, the business has expanded, and 95% of the employees have been working here for 1 to 2 years. Company X is going to be abolished because the government will not select it for various projects. Company X is solely involved in government work. Y and Z are sister concerns of X.

Best Regards,
Kamrul

You mentioned that 95% of the employees are 1 or 2 years old, indicating that the remaining 5% have been with the company for over 2 years. Since Company X is 8 years old, all statutory requirements like PF, ESIC, POB, Gratuity, MB Act, etc., are applicable. Therefore, it is advisable to merge Company X with Company Y or Z or take over the company with all dues applicable for employee benefits. You can also transfer all employees to the new company without affecting their privileges or statutory dues.

To the best of my knowledge, if a merger is not happening, then a transfer letter should be issued. If the merger is happening, then a fresh appointment letter with detailed terms and conditions should be provided.

Dear Saji,

Your suggestion helps me a lot. A merger is happening, and I am very close to reaching a decision. When I am issuing a fresh appointment letter, should I copy the previous appointment letter following the same terms and conditions and date? Should I change the various types of letters issued to employees from time to time, for example, an increment letter, promotion letter, etc.?

Thanks,
Kamrul

You do not need to change every letter issued by the previous company. The letter should be subsequent to all the previous letters issued by the company. The letter will be fresh.