IT Companies Stealing Employee Money with Forced Leaves

We have written an article last week about some companies forcing employees to apply for leave during Christmas leave. We have asked whether this is happening in your company and also asked employees to cross check whether forcing employees to take leave is a legal violation or not.

A few readers responded back us by adding comments, mailing us that this has legal violations. We will have a closer look on what implications this has from the employee perspective and what legal violation it attracts.

From the company side it is justified that they are not billing to the clients for employees who are forced to take leave. If employees are in billable role and if client operates during Christmas period, employee will not be forced to apply any leave. Employees who are in free pool, non-billed, support roles are only asked to apply leave. The management claims that companies are losing billing and that’s the reason it is forcing employees to apply leave for this period.

But in the final calculation the company always makes money (20-25% operating profit) and employees end up losing their leave benefits unfairly.

We will see closer on what implication it has for the employees.

The total number of annual leave an employee has while working at onsite will be much less compared to offshore employees. Most of the companies give 10 days annual leave only for US locations. So if an employee worked for a whole year, the employee is eligible for 10 days leave.

The employee wishes to use this leave for returning back home and enjoy their time with family. But unfortunately cost of flight tickets during Christmas time will be at peak which is usually 2 -3 times more than the normal time fare. So employees are not able to travel back and his leave will be utilized unnecessarily against his wishes.

In US or in many European companies, clients offer paid leave to their permanent employees for such scenario. Likewise, Indian companies should also come forward and give paid leave to their employees who are working for them for several years. They should understand the pain it causes to the employee and provide paid leave and this help to have better employee-employer relation. In some employee cases, if they don’t have leave balance, they end up in loss of pay which affects their financial planning.

Now let us examine what are the possible legal violations we foresee in this action of companies:

  1. Employees can carry forward certain percentage of leave which can be encashed when the employee retires. Leave encashment is one of the retirement benefits provided as defined by Government of India. So forcing employee to take leave as per company wish reduces the retirement benefits of employees.
  2. Employees in India want to avail their leave for Diwali  or Bakhrid. USA or other European countries has Christianity as majority and they declare holidays during Christmas. But forcing employees to take leave for Christmas may give a feeling of discrimination based on religion in legal terms.
  3. Legally company can shut down for 3 months due to various reasons like natural calamity, raw material unavailability, temporary lock outs etc and this is called Layoff in legal terms. In that scenario, company has to get consent from labor department for doing that. So if company wants to shut down for 5 days due to client shut down, it should be informed and permission to be obtained from the labor department. So company cannot add policy which affects financial terms of employee without labor department intervention.

So this policy attracts various issues both in employee interest and in legal aspect. But whether legally this is challenge-able is not certain as there are no previous cases available in legal system. IT is a new model business and the law is not tested in courts with reference to IT sector. As employees are not objecting, companies are adding policies on their own and as no questions were raised against them by employees, this is followed as per higher management direction. As I mentioned earlier, it is a cake walk legal case if unions or employees seek remedy, there is a high chance this will go against the company.

The leaders in Indian IT sector, like TCS, Wipro, HCL or Infosys started their business from small level and grew their business along with their employees. As they grew from small start up to huge companies in a relatively short time, they had to keep closer association with employees and contribute to welfare of society.

Now, in the changed scenario of slow growth senior leadership in many of these companies are slowly taken over by next generation leaders. These new leaders were allowed to follow the business model with profit maximisation as main motto as taught in leading management universities. Some of the new leaders have done their education in western countries and try to impose western rules in Indian IT sector which is demanded by the shareholding investors. That’s the main reason for many of the issues including the one we are talking about now : chipping away employees earnings to add a few more thousand dollars to the company profits.

We expect new leaders should follow the legal and fair practices, and the founder leaders should ensure that. Infact, Narayana Murthy even mentioned last year that he has a communist mind and socialist heart; but he has a capitalist brain which decides eventually. Azim Premji donates 40% of profits he gets from Wipro to the society for philanthropist cause. They can make sure that charity begins at home and treat employees fairly by following legal and fair practices in the companies they head and own substantial shares. They should keep employee interest as core objective instead of having profit only motto.

Our intention is to point the common mistakes in IT industry from employees point of view and company should come forward to implement changes as per employee views. Profit against employee interest may give immediate tangible profits for short term but definitely non-tangible losses in the long term. Leaders in top management should understand this.

– A Senior IT Employee

Permanent link to this article:

Leave a Reply

Your email address will not be published.

%d bloggers like this:
Read more:
Wipro’s latest Layoff Gambit – Where do Employees Stand?

Wipro management is depositing 2 months salary in employee's account and then issues this letter. The letter says that the...

TCS in the same Bandwagon of Paycuts, Retrenchments as CTS (Cognizant)

This 25.7% operating margin (Rs 30,324 core) includes money taken through employees' variable pay cut. That is for every Rupee...