On merger issues and benefit to employees of transferor comp
skg
(Querist) 12 October 2009
This query is : Resolved
Thanks to Mr. Makkad opinion but I am waiting for more opinions from other experts also.
It seems that on Merger and acquisition there are limited case laws so far as benefits to employees of transferor company are considered.
More over it appears that Mergers are made only for the benefits of Management of transferee company and its employee that is why only one line clause like "terms
and condition of services applicable to employees of transferor company as on merger date will not be anyway less favorable to them then those applicable to them
immediately before the merger date" are written in such merger schemes for employees of transferor company.
In my opinion this clause should be precisely elaborated and defined in such schemes so that the employees who are not interested or feels that they will not be
prosperous in future due to this merger should opt for retenchment compensation from transferor company and search for new job instead of joining the transferee
company.But instead they were made to believe thru false propagandas by management of both companies that they will gain and be prosperous in future from this
merger.
Now it is clear that using this clause only the transferee company and its employee keep on enjoying benefits declared even after the merger date including statutory
benefits like bonus which is not covered in salary definition but arise from the profitability of the company.In this way I think that Government machinery and High
courts sanctioning such schemes are only benefitting management and employees of transfree company and not the employees of transferor company who thus start
feeling that they are still part of the sick company and the letter they received after merger saying that "We look forward to mutually strong and prosperous association
in future" will make them only stagnant and not prosperous as monetary gain to them have been denied.
One thing that I forget to ask in my earlier query was :
The board of directors of both comapnies in their respective meetings on same "x" date (which later on also declared as merger date in the proceedings of merger
scheme) gave their "in principle approval of proposed merger" and after 20 days from x date the transfree company management knowing that they are gaining several
crores, announced an incentive scheme for its employee.
Now my question is that whether employees of transferor company who became employee of transferee company with effect from "x" date as per letter issued to
them (after six month stating that they are now employees of transferee company wef x date) are eligible for this incentive or not, keeping in front the merger date "x"
and the the declared incentive date as "x+20 days".
rgds
skg
Raj Kumar Makkad
(Expert) 12 October 2009
Better to go through the notification of the transferee company over incentive given to its old employees within 20 days of merger date. There may be a term connected with past performance of is own employees or may be some other condition present therein. So I suggest to either yourself go through the incentive notice or provide its detail here so that we may provide you correct advice. If no any incentive qua continuous service exists then ther eis no occasion for discrimination of any type and all the employees are required to be treated at equal footing.
H. S. Thukral
(Expert) 16 October 2009
After the merger the employees of the transferor company have become employees of transferee company and as terms of the merger, the employee of transferor company shall enjoy continuity of service. They therefore can not be discriminated in the matter of bonus and other facilities. File suit for recovery of money due from the employer under section 33 C(2) of the ID Act in case of workmen and civil suit in case of other employees.
