29 December 2022
As of December 2022, 52 Indian firms, including startups, have laid off over 18,000 employees. The unicorns on this list include prominent startups like BYJU’S, Unacademy, MPL, Chargebee, Cars24, LEAD, Ola, OYO, Meesho, Innovaccer, Udaan, and Vedantu. Further, this list includes 15 EdTech startups, which collectively saw 7,868 employee layoffs.
Amidst the news of layoffs, Labour and Employment Minister Bhupender Yadav stated that retrenchment and layoffs will not be deemed legal if they are carried out outside the provisions of the Industrial Disputes Act of 1947.
The Industrial Disputes Act, constituted on March 11, 1947, is legislation that governs industrial dispute resolution in India.
The Act aims to prevent illegal lockouts and strikes and offer relief to employees who are illegally laid off without following due process. It provides guidelines for various processes, such as conciliation, arbitration, and adjudication, with the aim of promoting mutually beneficial relations between employers and employees.
Here's a snapshot of the provisions of the Act:
Companies need to keep in mind the various laws that govern incidents such as retrenchment and mass layoffs. Besides having an in-depth understanding from a legal standpoint, they must also plan such pivotal events strategically.
The aim is to reduce the negative impact on employees while also keeping the business' sustainability and profitability in mind. Completely circumventing the law can result in a loss of reputation, reduce employee branding, and lead to financial losses in the event of employee lawsuits.
It is important for employees to understand the terms and conditions of their employment contract. They must go through it in great detail.
If they feel they are being treated unfairly without adequate financial compensation, they can seek legal support or appeal to the consumer court to seek a fair outcome.
In 2022, tech-enabled businesses have seen the most number of layoffs. Of these, EdTech leads with over 8000 layoffs across content, HR, sales, and tech teams. Around five EdTech companies have shut shop altogether.
The social media industry has also seen a large number of layoffs, with Twitter and Meta leading the way. As tech-enabled businesses continue to face new challenges, layoffs will continue to be a part of the cycle.
Companies should seek timely interventions to navigate the legal and financial hurdles of these times. By partnering with legal finance specialists such as Treelife early on, companies can build resilience and emerge stronger.
The content of this article is for information purpose only and does not constitute advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer to relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up. The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that the Author / Treelife is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof.
Treelife Ventures Services Private Limited.
All Rights Reserved. © 2022.