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A touted Indian e-commerce player Snapdeal’s decision to lay off 600 employees this week, has rattled the concepts of job security in the startup world. Industry experts have constantly believed that once funding slows down at a company, employee exits become the immediate after math.
Subramanyam S, Founder President and CEO of Ascent HR, spoke to Entrepreneur about this disturbing issue of the ecosystem which employees at startups should be prepared during their employment tenure.
According to Subramanyam, for startups or companies otherwise, the law remains identical and therefore there is a framework in place as far as India is concerned. “What distinguishes startups, which is also clear from the government’s end, that if your total strength is not above 100 employees, you don’t need to seek the go ahead from labor authority to dismiss people, what we call as retrenchment. This is now being considered to be extended to 300 employees,” he said.
Subramanyam has had close to two decades of experience in finance, legal, tax and business management, having worked in these areas in various corporate domains as a passionate professional before venturing to be an entrepreneur by setting up Ascent in the year 2002.
The Ubers and Olas of the world employ a majority of its workforce – which are the drivers – as independent professionals doing business and hence they do not fall under the definition of being employees. These drivers don’t have perks that can be availed by employees, he said.
“The framework allows this kind of network and when there is this sort of an arrangement you cannot take the right away from the entrepreneur. Therefore the termination and dismissals are happening on those grounds at these companies,” he said.
Pink Slip Trauma
The pink slip scenario arises when someone is called and asked to leave along with a certain compensation, which is a practice followed in U.S. In India, the similar practice is followed Subramanyam said.
Most of the time layoffs are happening because people are also willing to leave based on some compensation terms. Therefore the churn in employment has been fine and hence it’s not a pink slip story is not comparable in India, he said.
The Labor Authority does not take up the issue as well unless there is an industry wide complaint, which in this case is not happening; Subramanyam feels.
Having said that, Subramanyam also noted that the startup ecosystem brings along with it a lot of perks such as work culture flexibility, flat hierarchy, opportunity to innovate which today employees cannot avail at typical 9-5 jobs.
Apart from Snapdeal, companies like Zomato, Grofers and Flipkart have also had mass scale layoffs in the past.