Amazon to pay severance to laid off warehouse workers in Sonepat facility

Even after making investments of $6.5 billion in India through the last eight years, profitability remains elusive for the e-commerce major in the country with negative EBITDA margins of 5-10 percent, according to a report by brokerage firm Bernstein.

E-commerce major Amazon has agreed to pay severance to hundreds of protesting workers at a warehouse facility in Sonepat, Haryana, according to a workers' union.  The workers, who were employed through a staffing agency, were left without a job after the facility was closed down.

"The uninterrupted mass protest at the gate of DEL-3 created a huge impact on workers and in political circles. The main employer was forced to accept the demands of the workers of DEL-3. It is a huge victory for workers of platform industries in India," said K K Niyogi of Amazon India Workers Association (AIWA.)

With Amazon laying off on-roll and off-roll workers across multiple locations like Pune and Bengaluru due to slowing demand, unions have filed complaints with labour departments in different states in the past few months.

"We’re always evaluating our network to make sure it fits our business needs and to improve the experience for our employees, customers, partners, and drivers. As part of that effort, we may close older sites, enhance existing facilities, or open new sites, and we weigh a variety of factors when deciding where to develop future sites or maintain a presence," said an Amazon spokesperson.

"In this case, we have transitioned operations from the fulfilment centre in Sonipat, Haryana and the associates at this site have been provided with all the required support during this transition," she added.

Moneycontrol reported earlier that Pune’s Labour Commissioner’s Office sent a notice to the e-commerce giant, calling for a meeting in January over the sackings as well as the so-called Voluntary Separation Programme.

In November 2022, Amazon offered a “voluntary separation” offer to some Indian employees in the Amazonian Experience and Technology team.

Subsequently, Amazon India’s public policy manager had been summoned by the Labour Ministry following a complaint by the employee union Nascent Information Technology Employees Senate (NITES) alleging a violation of labour laws.

"These workers stood up to one of the most powerful companies in the world and won. This victory shows that when workers come together, they can make their voices heard and demand better treatment from their employers," said Christy Hoffman, General Secretary of UNI Global Union.

Nidhi, a worker who participated in the protests at DEL-3, said, "The closing of DEL-3 all of a sudden, without alternative employment and without mandated legal and legitimate dues, left us no other option but to make a mass protest against the principal employer."

Even after making investments of $6.5 billion in India through the last eight years, profitability remains elusive for the e-commerce major in the country with negative EBITDA margins of 5-10 percent, according to a report by brokerage firm Bernstein last year.

The company also faces immense competitive pressure in the fast-growing categories like smartphones and apparel, a weaker value proposition in 'new' business areas like social commerce and quick commerce, limited traction in tier II and III cities, and an unfavourable regulatory environment for foreign retailers.