Multiple sources told Inc42 that the Paytm's HR team has looked to persuade employees to resign voluntarily or face disciplinary action towards the end of May 2024
The employees have alleged that the company is trying to show the layoffs as voluntary resignations so that the company doesn’t have to pay any severance and that it can clawback the joining and retention bonuses
Paytm has denied the allegations around forced resignations and said the employees have been provided their due notice period during this restructuring process, irrespective of whether it involved resignation or termination
As the cost restructuring efforts at the fintech giant Paytm
continue, several employees in the Vijay Shekhar Sharma-led company allege that they have been asked to forcefully resign.
Multiple former employees told Inc42 that the company’s HR team has looked to persuade employees to resign voluntarily or face disciplinary action towards the end of May 2024.
The employees claim they received communication from Paytm’s HR team over WhatsApp calls and calls via Google Meet without any official documentation handed over.
“Paytm is trying to show the layoffs as voluntary resignations so that the company doesn’t have to pay any severance and that it can clawback the joining and retention bonuses,” one such impacted employee told us.
Inc42 has seen some documents that show Paytm pays one-time joining bonuses and one-time retention bonuses to several employees.
However, the company is supposed to retrieve the joining bonuses if the employee voluntarily leaves the company within 18 months of joining. Similarly, the retention bonus will also be recovered by the company if an employee leaves their job within 18 months of taking up the appointment.
Given this, impacted employees with less than 18 months of employment would likely have to give up their joining and retention bonuses.
Paytm, on the other hand, has denied the allegations of forced resignations.
Responding to Inc42’s query on the matter, the fintech major said that it ensured that due bonuses till the exit date of these employees were disbursed. Or, they are in the process of being disbursed by the company, as a part of the restructuring process, “ensuring fairness and transparency”.
Meanwhile, another impacted employee said that they were supposed to receive a retention bonus on May 31, on completing 12 months in the company, but this wasn’t paid. The performance bonus at the end of April was also not paid to many employees, confirmed another source.
However, employees also claimed that those who have declined to voluntarily resign, have received their May salaries.
These sources allege that Paytm’s HR team warned them of repercussions for failing to resign voluntarily, including termination with cause, which would negatively impact background verification and reference checks.
“We understand that the situation has become adverse for the company since the RBI restrictions on Paytm Payments Bank. We are not complaining about the layoffs, our problem is with the unethical practices for terminating these employees,” said one source.
So far, several employees have voluntarily resigned under the management’s pressure, as per the sources. At least 500 employees across Paytm’s payment gateway, devices, credit, and travel verticals have already been impacted by Paytm’s recent layoffs.
An employee who resigned after facing pressure from the HR team informed that he has not received any official communication since filing the resignation and there is no clarity on the full and final settlement.
A Paytm spokesperson said in a statement to Inc42, “We strongly deny allegations pertaining to any forced action on employees. Reports on bonuses not being paid to outgoing employees are grossly incorrect and misleading. As part of our strategic decision outlined in FY24 earnings, we have focused on pruning our non-core business areas, which has led to parting of some employees based on business priorities. As an organisation, we have rigorously ensured fairness and transparency during the process, including providing full notice period, due bonuses to several employees, and outplacement support. These decisions allow employees to adjust and plan their future move.”
The company reiterated that in line with its recent media advisory, many of its impacted employees have already opted for outplacement support and the startup’s HR teams are working to liaise with over 30 companies to help these employees.
“Our focus remains on building a leaner organisation that is well-positioned to deliver long-term sustainable growth and value to our stakeholders. We remain committed to supporting our employees during this transition,” added the spokesperson.
Meanwhile, Paytm also said that all employees have been provided their due notice period during this restructuring process, irrespective of whether it involved resignation or termination.
“We want to highlight that there is no new development on the layoff front,” said Paytm.
Meanwhile, a few employees have already filed legal complaints with the Ministry of Labour and Employment against Paytm and many are mulling to take the legal recourse, according to the sources that Inc42 spoke to. Some impacted employees are said to have sent notices to Paytm founder and CEO Sharma highlighting the HR team’s “unethical” behaviour.
Paytm’s Layoff Trail
It is pertinent to note that the development comes on the legs of news agency PTI reporting that it was providing outplacement support to employees who have resigned due to the ongoing restructuring exercise at the startup.
Also, in a media advisory, Paytm said, “Reports of new layoffs at Paytm are speculative and misleading; no new developments have occurred. As outlined in our FY24 earnings, we continue to optimise our cost structure and enhance AI capabilities, focusing on core business. We handle all employee transitions with fairness, including providing full notice periods, due bonuses, and outplacement support, collaborating with over 30 organisations.”
On the other hand, Inc42 has reviewed multiple emails sent to Paytm’s employee escalation team earlier this month over the “unethical” demand for resignation.
“We have received your complaint and will thoroughly investigate the matter,” said an email response from the employee escalation team to one of the impacted employees.
In December 2023, Paytm had sacked hundreds of employees citing the increasing usage of AI-led automation.
In March this year, reports emerged that the company was trimming 15-20% of its total workforce.
Last month, during the company’s FY24 earnings call, founder and CEO Sharma clearly stated that led by capabilities of AI and focussing on core business, Paytm was working on significant cost efficiencies including a leaner organisation structure.
Hence, it is clear that the restructuring exercise in Paytm is ongoing as the company aims to save INR 400 Cr-INR 500 Cr annually.
In the March quarter of FY24, Paytm’s net loss more than tripled year-on-year to INR 550.5 Cr while its revenue from operations decreased by 2.9% YoY to INR 2,267.10 Cr. Q4 was its first quarterly result of Paytm after the RBI barred Paytm Payments Bank from onboarding new users and from offering various services including UPI payments and deposits.
Recently, Inc42 exclusively reported that in a new top-level exit at Paytm, its chief human resources officer (CHRO) Swati Rustagi resigned from her position.
After a tumultuous performance in the stock market, shares of Paytm have started showing signs of recovery again. In Wednesday’s (June 12) trading session, the shares bounced back to close at INR 400 level after more than two months.
