A case study drafted by someone, attracted my attention.
I also found an insightful answer for that. So if anyone has a clear view, please enlighten us all.
An XYZ company is decided to wind up its operation in india and terminate all employees consequently.
- One female employee is on maternity leave. (15 days over from the beginning of leave)
- An employee needs just another month to complete 5 years ( gratuity) but company decided to close down in this month only.
So what would be the best options/views/ Decisions since the mangment is not ready to afford more expenses. But ready to pay 1 or 2 months salary as a subsistence allowance.
Can anyone give a hand with this?
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Labour law – The employer intending to do a closure of his establishment has to necessarily apply at least ninety days in advance to the appropriate government. A copy of the said application has to be given to the representatives of the workmen as well.
Section 4(2) of the act – an employee who has completed 4 years and 240 days is eligible for Gratuity.
Female employee – Eligibility of maternity benefit 6 months paid leaves.
Kindly go though the insolvency and bankruptcy code 2016, for better clarification, if the employer is not able to settle all dues towards govt /employees, it will turn into debt of the company and insolvency and bankruptcy acts take over.
And court will settle the pending dues to the lenders / employees etc after selling all asset post insolvency.
Note: The Insolvency and bankruptcy code 2016, a big catch…if any loan is due to be paid to any the bank or financial institutions, the act gives the power to the lender not only to seize all asset of the director, not only the director but also their all-blood related relatives and put their asset into auction to settle all dues.
What to do In case if the company is not willing to give more than 1 month as paid Maternity leave?
total No of employees in that company should be less than 10
Yes, on this the establishment will not have issue to shut down the operation without any problem from any govt authority.
The establishment cooling period is 90 days, company will have to provide proof of documents and clearance from all govt authority and department before closing down the operation, (salary credit of employees, EPF, esic, pt etc )
Advertisement in national and local newspaper for shutting down the establishment located in particular address.
Establishment cannot get closed down before clearing all dues