Transitioning an employee from an Employer of Record (EOR) arrangement to direct employment is a significant process that requires careful planning and execution. Here's a detailed look at how this transition typically works:
The transition process begins with a thorough review of the employment agreement between the client, employee, and EOR. This document outlines the terms of employment, including termination procedures, notice periods, and severance packages. It serves as a guide for ensuring the transition is conducted effectively and legally.
After deciding to transition an employee, you must notify the EOR in writing. This notification should include:
Clear and thorough information promotes a seamless transition process under contract obligations.
Once the EOR is notified, you should discreetly inform the employee of the transition decision. This communication should:
Open communication reduces misunderstandings and promotes a seamless transition.
The EOR calculates the employee's final compensation, which includes:
Salary: Pro-rated salary for the notice period.
Leave Encashment: Compensation for unused vacation or sick leave.
Bonuses: Any outstanding bonuses or reimbursements.
Timely payment is crucial to meeting employer obligations and maintaining employee satisfaction.
If applicable, the EOR manages the calculation and distribution of severance packages, ensuring compliance with local laws and company policies.
After processing final payments, the EOR handles the offboarding process:
System Access Revocation: Promptly revoke the employee's access to company systems to enhance asset security and reduce data breach risks.
Asset Recovery: Collect company property, including laptops, mobile devices, and access cards.
Documentation: Document the termination, including notices, exit interviews, and agreements, for record-keeping.
The EOR can offer post-termination support, assisting with:
Unemployment Benefits: Guidance on unemployment benefit claims.
Career Transition: Career transition services to help the employee find new employment.
This support demonstrates a commitment to employee welfare and helps facilitate a positive transition for all parties involved.
Notice Period: In India, a notice period of at least 30 days is standard for terminating employees. However, employees terminated for misconduct can be dismissed immediately without compensation or notice.
Termination for Reasonable Cause: Indian laws allow termination for reasons like willful insubordination, theft, fraud, extensive unexcused absences, and disorderly conduct. Employees must be given an opportunity to explain themselves before termination.
Collective Dismissals: For large-scale terminations, government approval might be required in certain sectors.
Employee Termination Checklist: Before serving a notice of termination, review your company's HR policies and the employee agreement to ensure compliance with local laws and company procedures.
Termination Letter: A formal letter of termination is usually required, marking the beginning of the notice period.
As a leading EOR provider in India, Wisemonk offers comprehensive support to streamline your employee transition process:
By partnering with Wisemonk, you can ensure that your employee transitions are handled professionally, legally, and efficiently while maintaining compliance with Indian labor laws and protecting both employer and employee interests.