Is It Legal for a Company to Operate Without an Office? What Employees Can Do About Settlement Issues When Offices Close

Hello Experts, A small IT company in Chennai has closed its office and is conducting its business with all employees working from home. I have two questions. Is it legal for a registered company to operate without a physical office premise? If not, what legal action can be taken against the company for running its operations without a registered office? How can an employee take legal action against the company regarding a full and final settlement issue when the physical office is closed?

Dear Parimala, your query is more about the proximity of the office rather than the actual problem that you or someone else is facing. The replies to your questions are as below:

Is it legal for a registered company to operate without a physical office premise?

Due to the pandemic, many companies are conducting their operations with employees working from home (WFH). However, to register a company, there must be an official address. You may check the company's website. Also, the company's address should be mentioned in the appointment letter issued to the employee.

What legal action can be taken against the company for operating without a registered office?

I believe this scenario may not arise. You can search on Google to find the address of the registered office. As mentioned earlier, refer to the company's website or the appointment letter for the address.

How can an employee take legal action against the company regarding a full and final settlement issue when the physical office is closed?

The company's mode of operation and the Full and Final Settlement (FFS) are two separate matters. The closure of the physical office does not affect the process. You can obtain the company's address from Google or the appointment letter and send an official hard copy letter for the clearance of FFS. Ensure to send it by Speed Post with acknowledgment due and also send a copy by email. Keep records of all correspondence. If there is no response, you can file a complaint with the Labor Office under the company's jurisdiction.

Final Comments

Even if the business owner has not registered the company or complied with the Shops and Establishment Act, employees should have proof of employment. If necessary, a complaint can be filed with the labor office. Focus on recovering dues regardless of legal compliance.

Thanks,

Dinesh Divekar

Thank you for the clarifications, Mr. Dinesh. Actually, one of the employees was forced to resign, and the employee is facing problems in getting the final settlement. The management has closed the office. We have raised the dispute with the labor office, and they have sent a notice. However, since the office is closed, the notice is not reaching the management, and they are not appearing for the hearing. The labor officer is also not making serious efforts to bring the management to the table other than just sending notices. This is the issue we are facing.

We have the registered office address, but the company is not currently operating there. Therefore, we need to take action against them for not operating in the registered office location in order to receive our dues.

Please advise.

Parimala.

Dear Ms. Parimala, please try to understand that every government official charged with certain statutory duties has his official limitations. The labor officer, who is a conciliation officer under the IDA, 1947, can at most initiate conciliation under section 12 of the Act only if the complaint is an industrial dispute. Non-payment of dues to an employee under F&F Settlement, per se, is not an industrial dispute under the IDA, 1947 requiring conciliation. Either the employee can file a claim before the Labor Court under section 33-C(2) or under section 15 of the Payment of Wages Act, 1936 before the D.C.L, who is the authority under the Act.

Therefore, you cannot blame the labor officer for the non-service of notices sent by him to the company due to its registered office remaining closed. It would be better if you write a complaint to the State Registrar of Companies in this regard if it's a registered company under the CA, 2013, or issue a paper publication about the next date of the hearing fixed.

Dear colleague, just to add to what other learned colleagues have expressed.

Issue of Unpaid F&F Settlement

The issue is about unpaid F&F settlement, and notices served by the Labour office to the registered office of the company are getting returned unserved as the owners are not operating from the office.

If the company has a registered office, it is obvious that it is registered under the Companies Act and/or with shops and establishments authority as a proprietary/partnership company. The names of the proprietor/partners, who have the ultimate authority in this matter, and their addresses must be available on their records. Try to obtain this vital information and arrange to get the notices served individually on their available residential addresses.

Just because the registered office is non-functional does not mean the owners can escape their legal obligation.

Legal Action for Non-Payment of Dues

This issue is about non-payment of dues and follows the appropriate advice of Mr. Umakanhan regarding filing a case under sec 33-C (2) of the ID Act.

Regards,

Vinayak Nagarkar

HR and Employee Relations Consultant

Thank you for the suggestions, Mr. Umakanthan and Mr. Vinayak. Actually, we filed a claim with ACL. The problem we are facing is getting the company authorities to the negotiation table. We have sent the notice copy via email and WhatsApp to the owner and plan to present this as evidence to the ACL during the next hearing.

Parimala