Rights of an employee of a transferor company after amalgamation in transferee company
skg
(Querist) 14 February 2013
This query is : Resolved
Dear Experts
As a practice during amalgamation of two companies employees of transferor company are assured that their service condition will remain unaltered and will not be less favourable to that before the amalgamation.
Also transferee company as a general notice and separate notices to each employee take undertaking that they look forward for a long and prosperous future and will make the transferor company a profitable unit under them with cooperation of employees of transferor company.
My question to experts is that say certain employees of transferor company working in account, sales, HR department after three year of amalgamation are terminated defining them as surplus.
1)Whether this act will be an illegal step of management of transferee company who did not consider its own employees of these department first but targeted only employees of transferor company.
2)Whether under Merger & Acquisition laws the transferee company can exercise such type of rights and without permission of amalgamation sanctioning authority or Monitoring authority like BIFR and AAIFR who approved the merger.
3)Can such employees or a single employee can sue both the transferee company as well as sanctioning authority directly in High Court pleading that this merger caused their services got terminated by declaring them surplus despite written assurance that they will be more prosperous with the transferee company in future?
pls provide your valuable advice
rgds
R.K Nanda
(Expert) 14 February 2013
state actual facts, if any.
Guest
(Expert) 14 February 2013
Depends upon pre-merger agreed terms between the tranferree company, employees and the transferring comany.
No scope of litigation success if the employees had not been fully cautious in accepting service terms & conditions or purring forth their own terms before merger.
Whatever agreement is required to be entered in to should be before the merger actually takes place. Amalgamation sanctioning authority or Monitoring authority can't take care of the service related terms of employees after merger, which have duly been agreed to unwittingly or in good faith by the employees.
In fact the workers unions in most cases are not able to anticipate the implications of the terms in post merger environments that depend solely at the mercy of the transferree company after merger, the transferring company having become merely a subsidiary of the trasferree company.
skg
(Querist) 14 February 2013
Dear Nanda/Dhingra Sir,
The actual facts is that employees of transferor company which was declared sick by BIFR were informed by its management (nothing in written) that no need of paying retrenchment compensation to them under section 25F or 25 FF since the new company is a big profit making company and so none of the employee decided to opt for compensation from transferor company or objected to this merger.Further they got fully satisfied by the notice in which they were assured of their prosperous association in future with the transferee company as already mentioned. But why they change their stand after 3 years despite that they were still in profit yet they terminated employee on grounds of surplusage/reorganisation/recession etc.
rgds
Guest
(Expert) 14 February 2013
Dear SKJ,
It is big hidden secret, which the employees could not anticipate any time.
First of all the transferree company avoided to pay the retrenchment compensation, a bid liability, on behalf of the transferring company by hoodwinking the employees to hoodwink ever the BIFR/AAIFR, who are concerned only with the financial health of the company for the purpose of revival.
Secondly, if the employees had also been transferred, even virtually, under the control of the transferree company, both the transferring company as well as the transferree company have also been able to avoid payment of due gratuity to each of the employee of the merged company on behalf of the transferring company, which was the liability of the transferring company, on acquisition of changed status. So, I doubt, if the company has recognised the service of employees rendered under the previous company to be the under the transferree company.
So, you need to check these vital points also.
Kirti Kar Tripathi
(Expert) 14 February 2013
If amalgamation of two or more industries is taken place, under the law the all units shall be one entity and for all purpose the unit shall be deemed as one. Therefore, it can decide its policies as a one unit. Thus in case, it decides to/reduce or retrench its employees. It can very well do as it is its fundamental right to runs it business as it wish but such reduction or retrenchment shall be in accordance with principle of last come first go and for that purpose, the establishment has to prepare a common seniority list of all its erstwhile units and proceed in accordance with their respectve seniority.
skg
(Querist) 14 February 2013
Dear Tripathi ji
You said that the transferee company have to have follow the "last come first go' rule.
As I mentioned that the employees of transferor company belongs to both category i.e. some clerical(workman) and some executives (non workman). In this scenario where to file case either in labour forum or civil forum or directly to High Court telling that "last come first go' rule has not been followed by transferee company who along with BIFR is also guilty.
pls. guide
Kirti Kar Tripathi
(Expert) 15 February 2013
Naturally it would be a policy matter, if any decision taken by the management, it would affect the entire industrial atmosphere of the industry as such it would be an industrial dispute within the scope of industrial dispute and its provisions can be agitated irrespective the facts the affected employees are workmen or executives as it would affect both. For which union can raise industrial dispute challenging the action of the management. If it is challenged by the individual employee, in that case the employees, those are covered with the definition of workman can invoke provisions of Industrial Disputes Act and non workman has to seek remedy in Civil Court but in Civil Court, no reinstatement is possible, the employees can claim only compensation and damages.
Kirti Kar Tripathi
(Expert) 15 February 2013
Naturally it would be policy matter, if any decision taken by the management, it would affect the entire industrial atmosphere of the industry as such it would be an industrial dispute within the the Industrial dispute and its provisions can be agitated irrespective the facts the affected employees are workmen or executives as it would affect both. For which union can raise industrial dispute challenging the action of the management. If it is challenged by the individual employee, in that case the employees, those are covered with the definition of workman can invoke provisions of Industrial Disputes Act and non workman has to seek remedy in Civil Court but in Civil Court, no reinstatement is possible, the employees can claim only compensation and damages.
Kirti Kar Tripathi
(Expert) 15 February 2013
No remedy is available, if it is challenged in High Court directly.
skg
(Querist) 15 February 2013
It means that ultimately our law makers are illiterate who never thought of this scenario during amalgamations and favoured private economic forces or gave them a loop hole of knowing that they are capable of affording time consuming litigations starting from district level and ultimately the innocent employee who along with his dependants will not be able to climb the ladder of law for 15 to 20 years of litigation and will forget about violation of his fundamental right of livelihood given to every citizen under article 14 or 21 of our constitution.
Guest
(Expert) 15 February 2013
Neither law makers are illiterate, nor the implementors. There is clear drawback in the system, lack of coordination between the various ministries & departments and the short-sightedness of the authorities, who try to see on a very limited aspect of the problem the way that is presented before them, but without paying attention to any of the associated problems.
