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Labour union accuses Tech Mahindra of layoffs, unfair termination

The company denies developments related to layoffs, says 1700 associates added this quarter

June 14, 2018 / 03:49 PM IST
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A year after it drew flak on social media for the callous sacking of an employee, Tech Mahindra has again been accused of unfairly terminating the services of some of its employees.

Last week, the Chennai-based IT employees wing of labour union New Democratic Labour Front posted a release on its website claiming that 1,500 employees were laid off at Tech Mahindra, without due processes being followed.

A Tech Mahindra spokesperson denied the developments related to layoffs.

"Tech Mahindra has added 1700 associates in the ongoing quarter. Our endeavour is to build a digital workforce of the future. We will continue to focus on reskilling and right skilling our employees to keep pace with the changing technologies and dynamic market needs. As a policy driven company, we adhere to global standards and processes pertaining to our human resource,” the company said in an e-mail response to Moneycontrol’s queries.

Moneycontrol spoke to several of these employees to hear their version of the events.


Most of them had a similar story to tell. With work experience ranging from seven to 15 years, these Pune-based employees say they were wrongfully given low ratings, not given a hearing and asked to quit after signing a separation agreement and two months full salary.

“The management has created fake performance issues. We had mid-term appraisals where positive feedback was given. Now in the annual appraisal, all that has turned negative and we have been handed an “L” rating,” said an employee.

Tech Mahindra’s rating system follows an “XCEL” model, where X is the best or extraordinary performance rating, while L is the lowest. Last year, the "X" was scrapped as the company moved away from the bell-curve model.

All the employees Moneycontrol spoke to said they were referred to a “grievance panel” that was tasked with giving the employees a chance to explain why they feel they were unfairly treated.

“It was just a formality. They answered none of our questions and gave us little clarity about how and why we were given L ratings,” said another employee.

Some employees complained of having a positive track record and learning ability but were still given the lowest rating.

“My immediate manager called and told me he had given me a “C”, which is the average performance rating. He also had no clarity on how and why that was changed to L. The appraisal process is very opaque,” said another employee who had been with the company for over six years.

Some are delaying meeting their human resource managers because they know what the meeting will end in signing the separation agreement and quitting on the spot.

“If you do not sign the separation papers, they call the guards, take your badge and you have to leave there and then. You won’t be given any salary as full and final settlement either,” said another of the employees.

The separation agreement, a copy of which was seen by Moneycontrol, says that “it has been mutually agreed that the Associate shall cease to be in employment of the Company with immediate effect i.e. from the date of signing of this agreement” subject to some terms laid out by Tech Mahindra.

The agreement says the employee will be paid 70 percent of their two months’ salary and 30 percent subject to tax obligations at the time of full and final settlement.

“That (the severance pay) is a good thing at least,” said one of the employees who was asked to sign one such contract.

Ordinarily, employees with a low performance rating have the option of being put on a performance improvement plan (PIP).

Tech Mahindra has a detailed PIP, a copy of which was seen by Moneycontrol.

According to the policy, employees on contractual rolls and those on “business wait and awaiting project placement” are not eligible for PIP.

Most of the employees who have been asked to leave were on either business wait or bench.

“I was put on bench in February because my previous manager said it was “too easy” for me.  I was interviewed by more than three project managers who were interested in taking me on, but the HR blocked my profile for 45 days, and refused to unblock me despite my repeated emails and reminders. Around 15 May, I saw my status in the system had changed to audit and review,” said one of the employees quoted above.

The NDLF, which first wrote about the issue, said they had been contacted by 30 employees about such unfair layoffs so far.

“We advise them about legal rights of employees and ask them to resist forced resignations. Those who are already out of company to file petition under section 2A of Industrial Disputes Act. And those who are still in the company to form a group and file grievance petition under section 2K of Industrial Disputes Act,” said NDLF IT Employees Wing secretary Sugendiran.

The association feels the real reason for these “forced resignations” is a drive to cut costs by sacking employees.

“The IT industry has been struggling, and employees are only told what they need to know. Mostly, only the non-performers and non-adapters are asked to leave, but for every genuine case, there are a few unfair ones as well,” said a legal expert in IT related labour law cases on the condition of anonymity.

The IT industry has been grappling with a difficult business environment for many quarters now. Revenues from its traditional outsourcing business has been declining, while only a few companies have been able to grow their digital business revenues meaningfully, so far.

According to a recent report by professional investment information and credit rating agency ICRA, the aggregate growth of Indian IT Services companies (13 sample companies) was at 3.9 percent during the fourth quarter of the last fiscal, compared to compounded annual growth rate of 17.1 percent in the four year period between FY2013-2017 and a 4.2 percent growth in last fiscal year.

The industry has been impacted by factors including the macro-economic environment, lower deal sizes in digital technologies, cloud adoption and high competitive intensity from local as well as international players, according to ICRA.

The legal expert added that labour laws in India are a state subject- every state has its own rules- but overall, they are quite employee friendly.

However, given the way IT companies are structured, getting embroiled with the Labour authorities will impact their business in terms of time and effort.

“The situation is further complicated by the fact that IT companies in India have offices across States, and if a number of people from a project are asked to leave across five locations, they will have to deal with five different Labour authorities,” she said.

The companies are usually accommodating- they will increase the notice period or pay a little more as part of separation agreements, but employees cannot be asked to quit immediately, she added.

Meanwhile, a company spokesperson said: "At Tech Mahindra we are deeply concerned with attempts at speculation and misrepresentation of facts in the media relating to our employees. Tech Mahindra has zero tolerance policy on such matters, we are cognizant of our responsibilities and pledge to continue to create awareness among the masses regarding such falsehoods."
Neha Alawadhi
first published: Jun 13, 2018 05:57 pm

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