How to Address Employee Concerns About Gratuity and Joining Dates During Company Merger?

Sir, I am running two companies and I am planning to close one company. In that company, nearly 50 employees are there. Now I want to transfer all those company employees to the present company. I have changed their PF account to the new company, and also, the date of joining has been changed. Now the employees are asking why the old date of joining is required in the pay slip for gratuity calculation. I explained that it's not possible to change the date of joining in another company and I shall provide a letter stating that at the time of retirement, we will calculate gratuity based on the actual date of joining only. However, the employees are requesting a formal letter. Can you guide me in this regard?

Dear member, You may follow the following process:

a) Obtain a letter of resignation from all the employees of the company that will be closed.

b) Pay the gratuity and other dues to the employees as applicable.

c) You need to protect the seniority of the employees for whom the gratuity is not applicable. For them, include a paragraph in the appointment letter that for the calculation of gratuity and promotion purposes, their service will be counted from the date of joining of the former company. Otherwise, for all other matters, the date of joining of the present company will be counted.

Your query was on gratuity only. However, the employees could claim their seniority for promotion purposes also. Hence, I recommend the inclusion of the clause on promotion and foreclosing the matter now itself.

Thanks,

Dinesh Divekar

Hi, How long were you running the first company? Closing Company A is your decision, and for that, employees should not be penalized.

Transfer of Services

So, you should transfer their services to Company B. You should not force employees to resign, which would lead to forfeiture of benefits. Being the same group company with the same proprietor, they are legally eligible for all benefits.

Issuing a Transfer Letter

You can issue a transfer from Company A to B, and in that letter, you can add the following: Subsequent to this transfer, for the purpose of gratuity calculation, your date of joining with Company A will be considered.

Accrued Leaves

Also, what will be the fate of accrued leaves? You may encash the EL or PL balance for eligible employees.