Employees’ Rights in Case of a Transfer of Undertaking
There are specific provisions under ID Act, that protect ‘workmen’ in cases of transfer of business undertakings. These however do not extend to non-workmen; thus, in case of non-workmen, the terms of the employment contract and/or the internal policies of the company would have to be examined.
In terms of Section 25FF of the ID Act, where the ownership or management of an undertaking is transferred, whether by agreement or by operation of law, every workman who has been in continuous service with that undertaking for not less than 1 year, would be entitled to one month’s notice, or payment in lieu thereof, and to compensation calculated at the rate of 15 days’ wages for every completed year of service.
However, Section 25 FF of the ID Act, would not apply to workmen if:
- the service of the workmen has not been interrupted by such transfer;
- the terms and conditions of service applicable to the workmen after the transfer are not in any way less ‘favourable’ than those applicable to them immediately before the transfer; and
- the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workmen, in the event of their retrenchment, compensation on the basis that their service has been continuous and has not been interrupted by the transfer.