How to Transfer an Employee Between Two Sister Companies Without Hassle?

This is my query: we have two private companies registered, and the directors for both companies remain the same. From 'A' private company, we have to transfer an employee to 'B' private company. Can I just give a transfer letter, or do we need to follow the resignation procedure and issue a new offer letter from 'B' Company? There is only a designation and a change in the nature of work. Salary remains the same. As we are a startup, there is no PF and Gratuity for now. Please guide on the documentation procedures to follow.

A company is different from its shareholders and the directors. As per law, a company has a separate existence from sister concerns. So, if you want to relocate an employee from one company to another company, the legal and proper way is to start afresh in the new company after making full and final settlement with the previous company.

Yes, you have to process the resignation of each employee from the existing company and manage their new joining process in the new company.

Hi, Please be very clear about the benefits to be transferred and what certificate you are going to provide for the same. If you are not continuing, then all the employees need to resign and new appointment letters issued. If necessary, we can discuss more details.

Hi, If you need to segregate or relocate an employee from Company A to Company B, in this scenario, you must issue a fresh appointment letter to all employees with the properly revised terms and conditions of employment.

Regards

Hi Trishika, With reference to the above, you have to follow up separately as the company is different. Internal transfer is not applicable in your case, so you have to take his/her resignation from Company-A. After that, he/she can join Company-B as per the law.

Your proposed relocation of an employee from a private company to another should primarily be based on the service conditions of the appointment. However, in any case where continuity of service or employment can be established by the employee at a later date, they may prefer to claim gratuity after 5 years. Since both companies are private with the same directors on the board, activities may differ.

Dear Trishika, As per the provisions of the Companies Act, 2013, your statement also asserts that notwithstanding the fact that the directors are the same persons, the two companies are different and separate legal entities. Therefore, the inter-company transfer of the services of the employees mandates an agreement between the two companies, along with the unconditional consent of the employees concerned. In the absence of either or both of these conditions, voluntary resignation from company A by the concerned employee, based on accepting the job offer from company B, would be the right course of action given the situation.

Applicable Law for Company Transfers and Employee Benefits

Which law is applicable if a company transfers from one company to another, and staff suffer from Provident Fund (PF) and gratuity issues for a continuous period?