The Regional Labour Commissioner of Bengaluru has summoned One97 Communications, the parent company of Paytm, in response to allegations of forced terminations of employees without proper compensation.
The summons follows multiple complaints filed by employees with the Ministry of Labour and Employment, accusing Paytm of violating employment laws and executing forced terminations without pay. The complaints were reported by Moneycontrol in June.
The notice, issued by the Regional Labour Commissioner (Central) under the Office of the Deputy Chief Labour Commissioner (Central), has requested representatives from Paytm management and the complainants to appear at the department’s office with all relevant records.
In response, a Paytm spokesperson stated, “We value the contributions of all our employees and remain humbled by their dedication. The decision to transition some employees has been a difficult one for all parties involved, and was made only after careful consideration of all available options.” The spokesperson emphasized that Paytm has endeavored to provide support to transitioning employees and ensure fairness throughout the process.
The affected employees, who claim they were forced to “voluntarily resign” without prior notice or severance packages, filed their grievances through the ministry’s Samadhan portal and other public grievance channels. These employees are seeking reinstatement of their jobs.
Following the RBI’s decision to ban Paytm Payments Bank, Paytm has been undergoing a significant restructuring, including employee rationalization. In a letter to shareholders on May 22, founder and CEO Vijay Shekhar Sharma indicated the company’s focus on core businesses and improving cost efficiencies to create a leaner organization, hinting at potential layoffs.
Sharma noted that employee costs had risen due to investments in tech and financial services. While investments in the merchant sales team and risk and compliance functions will continue, steps to reduce employee costs could save the company up to Rs 400-500 crore annually.
Paytm claimed to have provided outplacement support to employees who resigned as part of the restructuring efforts, aiming to assist them in transitioning to new opportunities.
The Labour Commissioner’s involvement highlights the need for transparent and fair practices in employee terminations, particularly during company restructuring processes.
