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CS Professional · Corporate Restructuring, Valuation and Insolvency · Planning and Strategy

After a demerger, Narmada Industries Ltd transferred its cement division to a new company, and employees of that division moved across. Which implementation step is most essential to protect continuity of the transferred employees' service?

The scheme should provide that transferred employees' service is treated as continuous, on terms no less favourable than before. This protects gratuity, provident fund and other service-linked benefits, whereas terminating and re-hiring or ignoring employees in the scheme breaks continuity and invites disputes.

  1. ATerminating all employees and re-hiring them on fresh terms with no service credit
  2. BEnsuring the scheme provides that service of transferred employees is treated as continuous, with no less favourable termsCorrect
  3. CLeaving employee matters entirely unaddressed in the scheme
  4. DOffering voluntary exit only to the senior management

Explanation

Schemes normally provide that employees move on terms no less favourable and with continuity of service, including for gratuity and provident fund. Termination and re-hiring breaks service and invites disputes. Silence on the issue leaves employees unprotected.

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