Oyo asks all employees to take 25% pay cut; some to be sent on furlough

Topics Oyo Living | OYO Rooms | Coronavirus

OYO's decision of salary cuts and furloughs for its employees is on account of the massive hit taken by the hospitality industry due to the ongoing Covid-19 pandemic. Photo: Shutterstock
Oyo Hotel and Homes has asked all its employees to take 25 per cent pay cut between April and July.

It has also told some staff members to take leave with limited benefits, or go on furlough for a period of four months (between May 4 and end of August).

The decision was communicated to employees by Oyo chief executive officer (CEO) for India Rohit Kapoor through an email on Wednesday. Business Standard has seen a copy of the email.

According to sources, the number of employees being asked to take this furlough is likely to be over 3,500. A fresh round of layoffs, following those in the US market, has also not been ruled out.

Talking about the impact of Covid-19 on the hospitality business, Kapoor said in the email, "Hence, today, our company is taking a difficult but necessary step for India, whereby we are asking all OYOprenuers to accept a reduction in their fixed compensation by 25 per cent. This will be effective for April-July 2020 payroll. All other benefits and terms of your contract will remain unchanged. Also, note that this action will be planned in such a way that post the proposed pay cut, the fixed compensation for any employee is not less than Rs 5 lakh per annum."

He further said the firm also had to take "the hard decision of placing some OYOpreneurs on leave with limited benefits from May 4, for four months until August. Those going on leave can avail benefits such as continuation of medical insurance and parental insurance, school fee reimbursement and ex gratia support. In addition, to our colleagues on this leave, in case there is an unforeseen medical emergency, we will support beyond the insured amounts, if the need so arises."

"It would've been better if they had just fired us," said an employee at the hospitality firm. "Furloughing is a smart way of doing things. In countries like Japan or US, the government pays 20-70 per cent salary to furloughed employees because these countries have social security benefits. In India, that is not the case. People are frustrated because this has come suddenly," this person added.

While the company has laid off and furloughed several employees and contractors in the US, it had said earlier this month that this step is in line with the Indian government's directive to not fire employees during the lockdown, which ends on May 3.

"Oyo is committed to zero actions (layoffs) that impact employment status and salaries of 10,000 plus OYOpreneurs on payrolls and tens of thousands of Oyo-managed assets staff, during this unprecedented period of a 21-day countrywide lockdown,” it said.
However, employees have been asked to go on furlough from May 4, a day after the current lockdown ends.

"We cannot even opt out of the furlough, so we will have to sit out without salary," said another employee, who did not wish to be named. "There are several overpaid employees at the top - we're talking of 27-year-olds who earn in crores - and a blanket 25 per cent cut for those who are not getting furloughed makes no sense. Managers are also inaccessible. So, if we want more clarity on anything, there is no way to reach them," he added.

The hospitality industry has suffered greatly due to the ongoing Covid-19 pandemic, and OYO has said earlier that while there is some revival in markets like China, Denmark and Japan, its revenues have dropped by 50-60 per cent while industry revenue for various hotel chain peers has dropped more than 75 per cent globally.

The Gurugram-based firm has said earlier that its executive team around the world has voluntarily decided to take salary cuts of 25-50 per cent, while CEO and founder Ritesh Agarwal is taking a 100 per cent salary cut for the rest of the year.

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