No office, no leaves!  HCLTech links employee leaves to office attendance

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India's third-largest software exporter HCLTech is rolling out a new policy wherein it will link leaves of employees with their attendance in office, multiple sources privy to the development told Moneycontrol.

The move is aimed at implementing three day work from office as companies seek to bring employees back to the campus after the pandemic.

In HCLTech's case, employees have to be in office three days a week and at least 12 days in a month, else their leaves will be cut for each day they are absent, said one of the sources seeking anonymity. This development comes five months after the company transitioned to a hybrid work model, asking employees to return to office three days a week.

“HR has started communicating this update to some teams from this week onwards over emails and this is already effective. Once our leaves are over, this could lead to loss of pay,” said an employee seeking anonymity.

As of today, HCLTech employees who have been with the organisation for less than three years are eligible for 18 annual leaves and one personal leave. Employees with more than three years’ tenure with the company, get around 20 annual leaves and two personal leaves.

Responding to Moneycontrol’s queries, an HCLTech spokesperson said, “Our hybrid work policy provides flexibility where people in middle and senior level management follow any 3-days a week work from office arrangement which supports collaboration. All other employees follow the working arrangements as necessary to meet the client commitments and these are planned by the respective managers."

Last week, in an interview with Moneycontrol, C Vijayakumar, CEO and MD, HCLTech had said that the IT services major had no such plans to “link variable compensation with bringing people to office,” unlike its larger rival Tata Consultancy Services (TCS).

“Return to office continues to increase, and it varies from business line to business line. Some business lines, we're able to comfortably work remotely. And for some business lines, we think getting people back to work is the right strategy,” Vijayakumar added.

Industry-wide trend

Though IT services companies initially embraced  a hybrid work model allowing employees the option to work remotely, things soon started to change as the majority of the IT industry’s current workforce joined during the Covid pandemic and had never been to their offices. Companies believe office attendance will help boost social capital among freshers entering the workforce and would help collaborate better on projects

Before HCLTech, TCS was in the eye of the storm after the company decided to link its quarterly variable pay component to the employee’s attendance in office in April. On having less than 60 percent attendance, the employee won’t be eligible for this pay out and consistent violation could bring to strict disciplinary actions.

TCS is expecting a minimum 85 percent attendance of employees in office for them to be considered to receive full quarterly variable pay from here on. Those with 75-85 percent work from office attendance will receive 75 percent of their variable pay while those with 60-75 percent attendance will only get 50 percent of their variable pay.

And this worked, as Chief HR officer of TCS, Milind Lakkad, shared that almost 70 percent of their employees are back to office.

Also read: Nearly 70% of TCS employees return to office after variable pay is linked to attendance

While HCLTech still has a hybrid approach, with mandating only three-day work from office, TCS has extended this to five-day work from office.

For HCLTech though, quarterly variable pay is less than 3 percent of the annual compensation of the individual. HCLTech’s chief people officer Ramachandran Sundararajan had said on July 12 that variable pay is not a big cost for the company.

“The quarterly variable pay is only applicable for the junior level employees and not the mid and senior levels. And there is no significant shift in that decision, it’s the same quarter on quarter,” he had at the company’s Q1 earnings conference on July 12.

For the June quarter, HCLTech’s net profit jumped 20 percent YoY to Rs 4,257 crore as against Rs 3,534 crore in the year-ago period. Its revenue from operations rose 6.7 percent to Rs 28,057 crore in Q1FY25 as compared to Rs 26,296 crore in Q1FY24.