Facing a Company Shutdown: Should We Resign or Wait for a Written Notice?

Dear sir, I work in a corporate culture company with operations across India. In 2015, they started operations in Delhi, and suddenly they have verbally informed us that they are going to close in February and are asking for resignation.

My questions are:

1. What should we do? What is the best method to get the best possible remuneration? Should we resign or wait for the company to provide written notice to us?

2. If my joining date is November 2015, am I entitled to any gratuity at this point?

3. If the company terminates us, will we receive only an extra month's salary or will they have to pay some additional amount upon closure?

Thank you.

Dear Harish Chander, It would have been better if you furnished the particulars regarding the type of establishment your company's Delhi operations are, the total number of employees currently employed, as well as those proposed to be rendered jobless, and the overall employee strength in the entire company. This information would be useful in determining whether the company can proceed with retrenchment independently or if prior permission from the government is required.

Understanding Retrenchment

Retrenchment refers to the termination of an employee's services by the employer after completing 240 days of service, for reasons other than voluntary retirement, retirement upon reaching the age of superannuation, non-renewal of contract, dismissal due to misconduct, or termination due to continued ill health.

Retrenchment Compensation

In the case of retrenchment, the employer is obligated to provide retrenchment compensation at a rate of 15 days of average wages last drawn for each year of completed service in the organization, in addition to one month's notice salary in lieu of notice or by providing a notice accordingly. Furthermore, if the total number of workmen exceeds 100 in the preceding 12-month period, the employer must obtain prior permission from the appropriate government authority. This requirement applies only to employees falling within the definition of a "workman" under the ID Act, 1947.

It seems like that is why you are being asked to resign voluntarily. In such a scenario, you would only be entitled to statutory gratuity if you qualify.

Recommendations

1) Do not resign under any circumstances.
2) To be eligible for gratuity under the PG Act, 1972, you must have completed a minimum of 4 years and 240 days of continuous service in the establishment prior to your termination date.
3) As explained above.

It would be advisable for all employees of the Delhi unit to approach the State Labor Commissioner as their intervention could be beneficial. You are not required to wait for your employer to take any action in this regard; you can raise an industrial dispute based on the apprehension theory.

Thank you.