Employee Rights and Obligations during Striking off a Company

Introduction

Striking off a company is a legal process that involves removing a company’s name from the register of companies. Throughout this process, employees of the company possess certain rights and obligations that are crucial to understand. This article aims to shed light on employee rights and obligations during the striking-off of a company, ensuring that both employers and employees have a comprehensive understanding of the legal framework governing this situation.

What is a company Strike-off?

Company strike-off also known as company dissolution, refers to the process of removing a company’s name from the official register of companies. It is a legal procedure through which a company ceases to exist as a separate legal entity. Striking off can be voluntary, initiated by the company itself, or it can be initiated by the Registrar of Companies (RoC) due to various reasons, such as non-compliance with statutory obligations, financial difficulties, or cessation of business operations.

What are the Employee Rights during Striking off a Company?

1. Notice Period: Employees have the right to receive a notice period before the company is strike-off. The duration of the notice period may vary depending on local regulations and the terms of employment contracts.

2. Severance Pay: If employees are terminated due to the company being struck off, they are entitled to receive severance pay. The specific amount of severance pay is determined by factors such as employment contracts, labor laws, and the employee’s length of service.

3. Unpaid Wages: Employees have the right to receive any unpaid wages or outstanding benefits owed to them before the company is struck off. This includes salary, bonuses, accrued vacation pay, and other entitlements.

4. Redundancy Compensation: In certain jurisdictions, employees who lose their jobs due to the striking off of a company may be entitled to redundancy compensation. The amount is typically based on factors such as length of service and local labor laws.

What are the Employee Obligations during Striking off a Company?

1. Cooperation: Employees have an obligation to cooperate with the company during the striking-off process. This involves providing any requested information, documents, or assistance required for the smooth execution of the process.

2. Confidentiality: Employees must maintain strict confidentiality during the striking-off process. They should not disclose any confidential or proprietary information about the company, its operations, or its clients.

3. Return of Company Property: Employees are obliged to return any company property in their possession, including laptops, mobile phones, access cards, and any other assets provided by the company.

4. Non-Compete Obligations: Some employment contracts may include non-compete clauses, restricting employees from working for competitors or engaging in certain business activities for a specified period after the striking-off process. Employees must comply with these obligations if they exist in their contracts.

Conclusion

The striking-off process can bring uncertainties and concerns for employees as they face the potential loss of their jobs and financial security. However, it is essential to be aware of the rights and obligations during this period. Employees have rights to notice periods, severance pay, unpaid wages, and potential redundancy compensation. Meanwhile, they are obligated to cooperate with the company, maintain confidentiality, return company property, and adhere to non-compete clauses if applicable. By understanding and fulfilling these rights and obligations, employees can navigate the striking-off process more confidently and protect their interests.

Suggested Read: What is winding up? and Process to strike off a Company