Dear Team CiteHR,
We are a conglomerate with two entities, specifically ABC and XYZ.
Here is my question:
Suppose an employee has been serving in ABC for more than 5 years and is entitled to benefits such as gratuity, leave encashment, and bonus under ABC\'s policies. Now, if the management wishes to transfer this employee to XYZ, is it legally possible to transfer his gratuity from ABC to XYZ?
What would be the most appropriate course of action in this situation?
From India, Mumbai
Acknowledge(0)
Amend(0)
We are a conglomerate with two entities, specifically ABC and XYZ.
Here is my question:
Suppose an employee has been serving in ABC for more than 5 years and is entitled to benefits such as gratuity, leave encashment, and bonus under ABC\'s policies. Now, if the management wishes to transfer this employee to XYZ, is it legally possible to transfer his gratuity from ABC to XYZ?
What would be the most appropriate course of action in this situation?
From India, Mumbai
Acknowledge(0)Amend(0)
Transferring employee benefits like gratuity, leave encashment, and bonus from one company to another, even within the same conglomerate, can be a complex process. Legally, as per the Payment of Gratuity Act, 1972, gratuity is payable to an employee on termination of his employment after he has rendered continuous service for not less than five years. In the scenario you've described, where the employee is being transferred and not terminated, the situation becomes more nuanced.
Step-by-step Course of Action:
1. Consult Legal Counsel: Considering the complexities and legal implications involved, it's advisable to consult with a legal counsel experienced in labor laws. This would ensure that the course of action adheres to all legal requirements and protects both the employee's and the company's interests.
2. Written Agreement: If the legal counsel advises that the transfer of benefits is possible, a written agreement should be prepared. This agreement should detail the transfer of benefits from ABC to XYZ and should be signed by all parties involved - the employee, ABC, and XYZ.
3. Inform the Employee: It's crucial to keep the employee informed about the entire process. They should be made aware of how their benefits will be transferred and any changes that might occur in the process.
4. Update Company Records: Once the transfer is complete, update the employee's records in both companies. In ABC, the employee's status should be updated to reflect the transfer, and in XYZ, the records should show the transferred benefits.
5. Communication with Governing Bodies: Depending on your jurisdiction, it may be required to inform the relevant governing bodies about the transfer. Ensure to follow the necessary protocols to avoid any legal issues down the line.
Do note that this is a generalized course of action and the actual process may vary based on your specific situation and jurisdiction. Always consult with a legal professional before making decisions related to employee benefits and transfers.
From India, Gurugram
Acknowledge(0)Amend(0)
80Step-by-step Course of Action:
1. Consult Legal Counsel: Considering the complexities and legal implications involved, it's advisable to consult with a legal counsel experienced in labor laws. This would ensure that the course of action adheres to all legal requirements and protects both the employee's and the company's interests.
2. Written Agreement: If the legal counsel advises that the transfer of benefits is possible, a written agreement should be prepared. This agreement should detail the transfer of benefits from ABC to XYZ and should be signed by all parties involved - the employee, ABC, and XYZ.
3. Inform the Employee: It's crucial to keep the employee informed about the entire process. They should be made aware of how their benefits will be transferred and any changes that might occur in the process.
4. Update Company Records: Once the transfer is complete, update the employee's records in both companies. In ABC, the employee's status should be updated to reflect the transfer, and in XYZ, the records should show the transferred benefits.
5. Communication with Governing Bodies: Depending on your jurisdiction, it may be required to inform the relevant governing bodies about the transfer. Ensure to follow the necessary protocols to avoid any legal issues down the line.
Do note that this is a generalized course of action and the actual process may vary based on your specific situation and jurisdiction. Always consult with a legal professional before making decisions related to employee benefits and transfers.
From India, Gurugram
Acknowledge(0)Amend(0)
You can transfer an employee from one organisation to another belonging to the same management. By such transfer the only thing that you have to ensure is the length of service and your transfer letter should contain a clause that for all purposes including calculation of gratuity the date of joining in the parent organisation would be considered. Since the second company has separate EPF account, the employee will get a new PF member id even though he will retain the UAN. he can easily transfer the PF accumulations to the new member id and with this he will get the benefits of service for PF pension etc. In the case of an employee under ESI, he will get the service benefits as he will be registered under the new company with the old ESI number itself. The only dispute that may arise is about the length of service for calculation of gratuity. This shall be confirmed in writing by putting a clause in the transfer order itself as mentioned above. otherwise, you will have to ask the employee to resign and settle his gratuity and then allow him to join the other company. This is not a fair idea because in respect of an employee who has not completed five years, you will not pay any gratuity and as such it will be a loss to the employee. Moreover, it will create a lot of apprehensions among employees. Therefore, ideally, you should make sure that service will not be affected by means of transfer.
From India, Kannur
Acknowledge(0)Amend(0)
From India, Kannur
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Employee Benefits.doc
SBT Vs Asst. Labour Commissioner- Gratuity dismissed employee-LTS.PD F
CiteHR.AI
(Fact Checked)-Your explanation is correct. The transfer should ensure continuity of service for benefits, including gratuity. Well done! (1 Acknowledge point)