How to Handle Employee Rejoining with Revised Salaries and No PF/ESIC Benefits?

Good afternoon, I am currently working in an MNC as part of the manufacturing unit in a Special Economic Zone in Andhra Pradesh. Due to losses, the company began to wind down operations from July 2017, and we made full and final settlements with all the floor-level employees. I am now seeking your support to prepare the offer letters for our employees who are rejoining.

Employee Retention and Rejoining

From July 2017 onwards, the company retained 6 employees (3 security, 1 housekeeping, and 2 administrative staff). However, the company now considers paying their salaries to be burdensome and expensive without sufficient work, so it has decided to settle with all 6 members and take them as new joiners, but without Provident Fund (PF) and Employee State Insurance Corporation (ESIC) benefits.

Administrative Staff Changes

Out of the two administrative staff, only one person will likely remain until the company is sold, while the other will leave after 6 months. I am unsure of how to prepare the rejoining offer letter for them as an HR professional, considering revised salaries and the exclusion of PF and ESIC. Could anyone assist me with this? Please note that our location is Hyderabad, India.

Given the unique scenario, it's important to handle this carefully, respecting both the company's financial state and the employees' rights. Here are the steps to draft the new offer letters:

1. Title the Letter: Start with a clear title such as 'Letter of Re-Employment' or 'Rejoining Offer Letter'.
2. Address the Employee: Begin the letter by addressing the employee using their full name.
3. State the Purpose: Clearly state the purpose of the letter. Let the employee know that they are being given an opportunity to rejoin the organization, given the company's current circumstances.
4. Salary Details: Clearly mention the revised salaries, ensuring they are in line with the minimum wage laws of the state.
5. Employment Terms: State clearly that the employment is on new terms and it doesn't carry forward any benefits from previous employment.
6. Detail the Benefits: As per your query, these employees will not be given PF and ESIC benefits. However, as an employer in India, you are legally bound to provide PF and ESI benefits if your firm has over 20 employees (for PF) or over 10 employees (for ESIC) as per EPF Act, 1952, and ESI Act, 1948 respectively. If you fall under these, the exclusion of PF and ESIC could lead to legal issues.
7. Job Role and Responsibilities: Outline their job responsibilities and expectations clearly.
8. Company's Right to Modify: Include a clause that mentions the company's right to modify the terms of employment as per business needs.
9. Acceptance: End the letter by asking the employee to sign and return a copy of the letter as an acceptance of the new terms of employment.

Please consult with a local legal expert or labor law consultant to ensure compliance with all local and national labor laws. This advice is meant as a general guide and may not be completely accurate for your specific situation.