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Isha Sharma   12 January 2022

How to transfer an employee from parent company to subsidiary company ?

What is the procedure for transferring an employee from the parent company to a subsidiary company?
what happens to gratuity , leave balance and payroll ?


 6 Replies

Dr J C Vashista (Advocate)     13 January 2022

What is your concern / problem / locus standi to the question paper ?

Real Soul.... (LEGAL)     13 January 2022

The authorised person should issue a trsnfer order and it should clearly state the terms of transfer that is wheather the accounts i.e PF and other befits would be retained by parent co. or the employee pay account along with all its strings will be trahferred to susidairy... this not an issue at all. However if in MOU the rules are set  regarding such issues should be followed

Isha Sharma   13 January 2022

thanks real soul, but we wish to transfer the payroll and other benefits as well. How do we proceed about the same ?

Real Soul.... (LEGAL)     13 January 2022

Just transfer the account head for  employee from subsidairy to  Holding co./ Parent company; That is simple accounting arrangment. Two ways;

1 > close the account of employee in subsidary and make payments to employee as what ever is due and open new account in Holding or Parentr co.

2. Transfer the account as it is to Holding or prent co.taht needs some documentaion and orders.


P. Venu (Advocate)     13 January 2022

The posting suggests deeper issues. Please post complete facts. Any suggestion depends upon the terms of appointment as well the status of the employee.

Aryan Raj   13 January 2022

In response to your query,

Yes it is possible This type of scenario is rather prevalent among MNCs and large corporate organisations that engage in mass recruiting. They put the mass under the radar and sift out the most promising ones once the process is completed. The remaining inmates are subsequently relocated to other facilities to perform or resign. 

The basic rules regarding the transfer of employees refer to Law Number 13 of 2003 Labour Act. In Article 32 of the Labour Act, it is explained as follows:

  • Placement of employees or Employees must be carried out based on the principles of open, free, objective, and fair, and equal without discrimination.
  • Placement of employees or employees must be directed to place employees in the right position. That is in accordance with expertise, skills, talents, interests. As well as in accordance with the ability, with consideration regarding dignity, dignity, human rights, and legal protection.
  • In addition, the placement of employee or Workers must be carried out with due regard for equal employment opportunities. And also considering the supply of employees according to the needs of national and regional programs.


Aryan Raj 

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