Can We Legally Transfer Workers to a New Subsidiary? Understanding the Implications

We are a Pvt. Ltd. company, referred to as A Ltd. We have some workers whom we want to transfer. The standing orders, as well as the appointment letter, state that the worker can be transferred to any sister/associate company in India.

The company where we want to transfer workers, B Ltd., is a subsidiary of the parent company of A Ltd. However, A Ltd. does not have any share in B Ltd. B Ltd. was acquired by the parent company of A Ltd. last month, after the terms of appointment and standing orders were announced.

My questions are:

1. Can we transfer the worker to B Ltd. being a 'sister' concern of A Ltd.?
2. Does B Ltd. have any legal association with A Ltd. so as to fit in the clause "can be transferred to any sister/associate company"?
3. Does the fact that B Ltd. came into existence only recently have any effect since standing orders/appointments are prior in time?

Thank you.

Dear [Name],

You have answered your query in your question itself. Please be informed that the provisions of the Standing Orders will be interpreted to the advantage of the workmen. In this case, the Sister Company came into existence later than the Standing Orders. Please don't get into a legal tangle. Please negotiate with the workmen and get their agreement for transfer.

With Regards,

V. Sounder Rajan

Thanks for your response.

My query is that a company is a going concern, so why should limitations be placed on it for establishing a new company? At this time, it becomes even more important to have experienced workers to start a new concern.

Do you have any case law on this?

Thank you

Dear Sir,

With regard to the query raised by our fellow member, you have stated that since Company B came into existence (acquired) after the issuance of the Standing Orders, it may land them in a legal tangle if they transfer the employees to Company 'B'.

I have a clarification: If at the time of the issuance of the standing order or appointment letter, a sub-clause is added stating that the employee(s) may be transferred to companies acquired at a later date by the parent company, will it be binding on the employees to accept it or can it still be challenged in a court of law?

Thanks & Regards,
J. Subramanian

Is it possible to get any case law on this subject regarding the transfer of a worker to a new company created after the appointment of the employee? The standing order only states that a worker can be transferred to any establishment of the company.

Hi, In this case, the legal ground is very clear. If the parent company is the same as the subsidiary company or the management is the same, then the transfer is very easy from one unit to another unit or company (subsidiary).

Thanks