Incident – On December 2, former employees of a Pune SaaS startup filed a joint complaint alleging they had not received their full-and-final settlement months after the company’s acquisition by a larger tech firm. Employees claimed HR stopped responding to emails, and payroll access was revoked. Some said they were owed up to two months’ salary, variable pay and expense reimbursements. The acquiring company stated informally that “liabilities were with the old entity”, leaving the workers in limbo. Labour authorities have summoned both entities for clarifications.
Emotional/Workplace Impact – The unpaid employees are emotionally drained. Many had already relocated to new cities or taken new jobs, assuming dues would arrive soon. Some reported missing rent payments or taking personal loans to manage expenses. Employees expressed deep anger that a company celebrating on LinkedIn about a “successful acquisition” left them financially stranded. New hires at the acquiring company now worry about the ethical culture of their employer. The situation has triggered fear among Indian tech workers: what protections exist when startups are acquired abruptly?
Compliance/Leadership Lens – Under the labour codes, full-and-final settlements must be processed within two working days of exit. Mergers or acquisitions do not absolve employers of wage liabilities. Authorities may treat unpaid dues as a prosecutable offence. Leadership must maintain escrow-backed wage reserves during acquisitions, ensure liability mapping during due diligence, and provide employees written assurances of settlement timelines. Poor handover of HR records can trigger audits and financial penalties. Ethical leadership demands prioritising worker dues before celebratory press releases.
Should acquirers be legally required to guarantee all dues of the acquired company’s employees?
How can employees protect themselves during startup buyouts?
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7Emotional/Workplace Impact – The unpaid employees are emotionally drained. Many had already relocated to new cities or taken new jobs, assuming dues would arrive soon. Some reported missing rent payments or taking personal loans to manage expenses. Employees expressed deep anger that a company celebrating on LinkedIn about a “successful acquisition” left them financially stranded. New hires at the acquiring company now worry about the ethical culture of their employer. The situation has triggered fear among Indian tech workers: what protections exist when startups are acquired abruptly?
Compliance/Leadership Lens – Under the labour codes, full-and-final settlements must be processed within two working days of exit. Mergers or acquisitions do not absolve employers of wage liabilities. Authorities may treat unpaid dues as a prosecutable offence. Leadership must maintain escrow-backed wage reserves during acquisitions, ensure liability mapping during due diligence, and provide employees written assurances of settlement timelines. Poor handover of HR records can trigger audits and financial penalties. Ethical leadership demands prioritising worker dues before celebratory press releases.
Should acquirers be legally required to guarantee all dues of the acquired company’s employees?
How can employees protect themselves during startup buyouts?
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The situation described is indeed distressing for the employees involved. It is important to understand that according to the labour laws in India, the full and final settlement must be processed within two working days of an employee's exit. This includes all dues such as salary, variable pay, and expense reimbursements.
Legally, mergers or acquisitions do not absolve employers of wage liabilities. The acquiring company cannot shirk its responsibilities by stating that the "liabilities were with the old entity". If the dues are not paid, authorities may treat it as a prosecutable offence.
To protect themselves during startup buyouts, employees can take the following steps:
1. Maintain regular communication with the HR department and keep a record of all the conversations.
2. Request written assurances of settlement timelines.
3. If the company fails to pay the dues, employees can file a complaint with the labour authorities.
4. Seek legal advice if necessary.
In addition, it is important for the leadership of the acquiring company to maintain escrow-backed wage reserves during acquisitions and ensure liability mapping during due diligence. This will help in avoiding such situations in the future.
Finally, it is also essential for the companies to prioritize the dues of the workers before celebrating the acquisition. This not only reflects ethical leadership but also builds trust among the employees.
From India, Gurugram
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Legally, mergers or acquisitions do not absolve employers of wage liabilities. The acquiring company cannot shirk its responsibilities by stating that the "liabilities were with the old entity". If the dues are not paid, authorities may treat it as a prosecutable offence.
To protect themselves during startup buyouts, employees can take the following steps:
1. Maintain regular communication with the HR department and keep a record of all the conversations.
2. Request written assurances of settlement timelines.
3. If the company fails to pay the dues, employees can file a complaint with the labour authorities.
4. Seek legal advice if necessary.
In addition, it is important for the leadership of the acquiring company to maintain escrow-backed wage reserves during acquisitions and ensure liability mapping during due diligence. This will help in avoiding such situations in the future.
Finally, it is also essential for the companies to prioritize the dues of the workers before celebrating the acquisition. This not only reflects ethical leadership but also builds trust among the employees.
From India, Gurugram
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Full n final settlement.doc
Full & Final Payment.xls