BYJU’S Layoffs: Employee Unions Cite Labour Law Violations, Prepare For A Legal Fight

In what could turn out to be a new headache for BYJU’S, the highest-valued Indian edtech unicorn, the employees sacked by it are mulling approaching the labour ministries of the central and various state governments. The edtech unicorn recently announced that it would lay off 2,500 employees, or around 5% of its workforce, and several labour unions are currently mulling action against the startup for allegedly violating labour laws.

This comes on the heels of BYJU’S decision to close down its branch offices and centres in nearly 60 cities of India, which has unnerved thousands of executives in these locations who are worried about losing their jobs. The edtech giant had earlier stated that it has an employee strength of 50,000.

The cutbacks are expected to impact around 10,000 employees and are a violation of India’s labour laws, according to various labour unions.

A spokesperson of the All India IT/ ITes Employee Union’s Maharashtra chapter said that the association would approach the state’s labour ministry against the alleged “unethical layoffs at BYJU’S”. 

The AITEU spokesperson told Inc42 that several employees who were sacked by BYJU’S had approached the body, and that talks would be held with other state bodies to press the union labour ministry to address the concerns of those who lost jobs.

“Unfortunately, corporates have not been held accountable for clear violations of labour laws which give them the ability to sack employees at their will. A private enterprise cannot sack more than 300 employees in one go. We have seen many such firings happening across the startup ecosystem lately. This needs to be taken up on a priority basis by the government,” the union body added.

Notably, BYJU’S rolled back its earlier plan of shutting down offices in Kerala after its CEO and cofounder Byju Raveendran held talks with the state’s chief minister Pinarayi Vijayan. After the meeting, the edtech unicorn said that it would relook at its restructuring plan and has decided to keep its Thiruvananthapuram office open. 

Meanwhile, a spokesperson for the company said BYJU’S is a responsible organisation and follows the law of the land. 

“The rationalisation exercise is being carried in complete adherence to the applicable labour laws. There has been no violation and we strongly deny such baseless speculation. BYJU’S employs nearly 50,000 people across India. Around five percent, or 2,500, of these positions are being rationalised as part of BYJU’S current strategic plan to grow profitably and sustainably.  Each of the employees affected by the restructuring is being informed individually with the empathy that they deserve and need at this time,” the spokesperson said. 

“BYJU’S is providing all of them a progressive exit package, including extended family health insurance benefits, outplacement services led by some of the industry’s best recruitment specialists, fast-track full-and-final settlement on demand and the provision of ‘garden leave’ where they can look for jobs while on BYJU’S payroll. All these employees will also be offered an assured path to return to BYJU’S in case they are unable to find a job in the next 12 months in new roles that are more relevant and productive for both the company and the employees,” the company’s statement added.

Regulatory Roadblocks For BYJU’S Ahead?

This is not the first time that BYJU’S has found itself caught in a regulatory maze over its work culture and layoffs, investments, and accounting practices.

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Earlier, Congress MP Karti Chidambaram wrote to the Special Fraud Investigation Office (SFIO) seeking a probe into the finances of the edtech giant. The MP had claimed that news reports had highlighted “grave allegations” against the edtech startup.

This time around, the employee unions have alleged that the layoffs announced by BYJU’S were in direct violation of the Industrial Disputes Act 1947 under Section 2(a)

For instance, Karnataka State IT/ ITes Employees Union (KITU), in a statement, alleged that BYJU’S “forcibly asked its employees to resign” which could be termed as an “unfair labour practice” (indulging in acts of force/ violence). The law gives the right to the employees to refuse to resign.

Earlier this year, coding startup WhiteHat Jr, acquired by BYJU’S for $300 Mn in August 2020, also let go of 800 employees. Full-time employees at WhiteHat Jr across teams resigned due to being asked to work from the Bengaluru office within on month.

According to KITU, an employer must take prior approval from the concerned state authority for firing more than 100 employees.

Meanwhile, Harpreet Singh Saluja, general secretary of the Nascent Information Technology Employees Senate (NITES), told Inc42 that the mass layoffs carried out by BYJU’S could also be a violation of Section 25 of the Industrial Disputes Act. Saluja said that no permanent worker employed by a company can be laid off for reasons not specified in the said section (seen below).

“It remains to be seen whether the often-cited reason for mass layoffs, which is the funding crunch, is included in the section. There are provisions such as closure or shutdown of a particular company that could lead to retrenchments but even then the company has to approach the designated labour ministry in that state to seek prior approval,” Saluja added.

He further said that NITES would also take appropriate action and write to the concerned state and union labour department authorities if the dismissed employees of BYJU’S approach it for resolution. “The need of the hour is to apprise the regulators/ authorities of the massive unemployment which is being created due to unethical practices by tech companies,” he said. 

Even as several employee unions are looking for action against Indian startups which have laid off more than 15,700 employees in 2022 so far, the contentions arise due to variance in labour laws in different states. According to experts, these differences are a roadblock for employee unions looking to put up a joint front against so-called “unethical” corporate practices.

Edtech Bears The Brunt Of Funding Winter

On his part, BYJU’S CEO Byju Raveendran recently wrote a letter to the employees, in which he tendered an apology for the restructuring exercise and said that the decision to let go 5% of the workforce was a “very difficult” one.

However, the continuous rise in the edtech giant’s marketing and promotional expenses despite the layoffs, including signing celebrities for brand endorsements, sponsorship deals for BCCI and the FIFA World Cup, have come under severe criticism. Critics have argued that the funding crunch has only affected BYJU’S employees and the unicorn continues to spend big on branding campaigns.

While the ongoing funding winter has affected the Indian startup ecosystem as a whole, the edtech sector has been hit the hardest. As per an Inc42 analysis, the edtech sector accounts for close to 45% of the over 15,000 layoffs in the Indian startup ecosystem in 2022. BYJU’S has laid off the highest number of employees within the sector, firing nearly 4,000 employees, including at its subsidiaries.

Last week, BYJU’S rival, Gaurav Munjal-led Unacademy announced another round of layoffs and said that it would be firing around 10% of its workforce. Besides, the funding winter has also forced as many as five Indian edtech startups – Lido Learning, Crejo.Fun, Udayy, Qin1 and SuperLearn – to shut operations.