cpc

can services be transferred to another company


Hi,

A private company engaged in insurance business has decided to outsource it entire back end operations to a vendor. It's being said that services of all barring a few select back end ops employees(not workmen) will be transferred to that vendor. For an individual employee point of view

1) Can this decision be challanged in civil court as violating the contract of service which does not contain such stipulations,

2) Can the Company remove services of the employees on the pretext of  'redundancy of job', if so can employees claim compensation,

3) If answer to point 2 is yes, what will be quanification of the compensation

4) The terms of employment contain a clause to the effect that services may be transferred to group companies. Can this be revoked as matter of right? 

regards,

 

 
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1) Can this decision be challanged in civil court as violating the contract of service which does not contain such stipulations,

You can challenge it in civil court as well as in Labour Court.  The latter is a better remedy.  But for that all the affected people have to pass a resolution giving the dispute a shape of "industrial dispute".

2) Can the Company remove services of the employees on the pretext of  'redundancy of job', if so can employees claim compensation,

If in the organisation, the entire workforce (including the managerial personnel)  is more than 100, the permission from the appropriate Government under Chapter V B of the Industrial Disputes Act is required before "retrenching" the workmen.  It is very difficult to obtain such permission.  If they obtain such permission, that permission order can be challenged in High Court under writ jurisdiction.  Assuming that they obtained permission and you did not challenge, then the principle of "last come...first go" has to be applied for retrenching the workmen.  The compensation is 15 days of wages for each and every completed year of service, if the workmen put more than 5 years service, gratuity at the rate of 15 days wages and also notice pay (if industry has less than 100 workforce, it is one month wages and if the workforce is more than 100 workers, it is 3 months wages)  

3) If answer to point 2 is yes, what will be quanification of the compensation

Said as above.

4) The terms of employment contain a clause to the effect that services may be transferred to group companies. Can this be revoked as matter of right?

Yes.  If it is same group of companies, having common balance sheet, common management, inter-dependency.  Otherwise it is illegal.  Basically, transferring the services to a vendor is illegal. 


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Thanks for the reply. However, just to re-iterate what if the concerned employees are not workmen as defined under ID Act. As such jurisdiction of labour court is ruled out at least for manegerial class. Can for them the basic instrument of contract of service be revoked to claim for compensation and damages as the Company is resorting to a practice not disclosed earlier.

regds

 
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Yes. the provisions of personal contract of service can be invoked in the civil court in respect of managerial personnel.

 
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