MC Exclusive | Labour commissioner summons Paytm management over alleged layoffs

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The Regional Labour Commissioner of Bengaluru has summoned One97 Communication, the parent firm of Paytm, in connection with the alleged forced termination of employees.

The development comes after series of complaints were filed by the employees with the Ministry of Labour and Employment, accusing the company of violating laws and forcing terminations without pay, Moneycontrol reported in June.

The notice was issued by Regional Labour Commissioner (Central), under the Office of the Deputy Chief Labour Commissioner (Central), Ministry of Labour and Employment.

According to the notice, seen by Moneycontrol, representatives from the Paytm management and complainants have been requested to appear at the department’s office along with all relevant records.

In response to queries, a Paytm spokesperson said, "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 team elaborated saying that it has strived to provide the best possible support to its transitioning employees and ensure fairness and transparency throughout the process.

"We are here to address and resolve any issues expressed by those affected and are actively listening to their feedback. Rest assured, we will continue collaborating with all stakeholders to ensure the best for our employees," the spokesperson added.

The aggrieved employees, who were forced to "voluntarily resign" without prior notice or any severance package, had filed their complaints through the ministry’s Samadhan portal and other public grievance modes along with relevant emails and documents, seeking reinstatement of their jobs.

Following the RBI’s decision to ban Paytm Payments Bank, which powered most of the railroads of the fintech firm, the Noida-headquartered firm has been undertaking a massive restructuring, including employee rationalisation.

In a letter to shareholders on May 22, founder and CEO Vijay Shekhar Sharma had said the company will focus on its core businesses and improve cost efficiencies to create a leaner organisation, hinting at the likelihood of layoffs in the future.

Sharma mentioned that the employee costs of the firm had risen over the years because of their investments in tech and financial services.

While investments in merchant sales team and risk and compliance functions will continue, the company will take steps to cut employee costs, Sharma said, adding that these measures could save up to Rs 400-500 crore annually.

The company claimed to have provided outplacement support to employees who resigned as a part of the restructuring efforts.