Curefit’s Layoffs Get Messy As Virtual Classes Take Centre Stage

Mukesh Bansal and Ankit Nagori-led Curefit is the latest entrant to the group of companies laying off employees as a result of the nationwide lockdown. Multiple employees told Inc42 that the company has decided to lay off around 1,000 employees, while at the same time, it is pulling back on its Tier 2 presence with shutting down of physical fitness centres. The company is now also looking to monetise the free virtual classes it had introduced in late March in light of the coronavirus lockdown.

The company had received $110 Mn in funding led by Singapore-based Temasek on March 21, just three days before the lockdown was announced on March 24, 2020. Curefit soon shifted to virtual fitness classes and even launched a challenge to allow people to complete a day’s training for which it would donate to the PM-CARES fund. Curefit claims to have donated INR 5 Cr to the PM-CARES fund through this challenge.

In its internal communication with the team, Curefit has repeatedly said that virtual classes have grown with a million new users, of which 80% were not members.

To drum up hype, Curefit had roped in celebrities for the virtual classes, which is a major point of contention for employees, who complain that if the company can pay for celebrity endorsements, it can also pay employees.

Founded in 2016, Bengaluru-based Curefit caters to multiple segments within the health and fitness sector, including physical fitness through Cultfit, mental wellness and yoga in Mindfit, food delivery and diet recommendations through Eatfit and medical and diagnostic centres through Carefit. It is said to employ over 8K people across the country.

Layoffs Across The Board At Curefit

According to employees, layoffs have come across the board — from trainers (master and lead trainers) to human resource executives to managers and centre heads.

The trouble for employees began with a meeting on May 1 called by Rishabh Telang, founder of Cult, which was acquired by Curefit in 2016 and forms the basis of the Cultfit physical fitness studios. In the meeting, senior employees and ‘master trainers’ were told that the company would lay off employees across the board, which includes trainers, managers, recruiters etc. They were also told that Curefit is closing its centres in 15 Tier 2 cities including Mysuru, Surat, Ahmedabad, Indore and others.

Lead trainers were also informed that employees with less than three months of experience will be let go, while those with bad ratings and feedback will be asked to resign. They were also asked to be prepared to answer any questions the impacted employees may have about the layoffs.

However, the next day, multiple master trainers received calls informing them of their termination. Employees told us that the company did not give a written intimation to the impacted employees and asked them to send in resignations on email, allegedly threatening to terminate if they don’t by the end of the day.

The company has offered employees the option of either taking their salary for May along with a final settlement in June or ending their employment in June to show more work experience on their resume and receive a final settlement in June. However, there is no work for these employees regardless of whether they decide to stick around until June.

According to the company’s standard employee contract, accessed by Inc42, employees can be ‘terminated by giving one week’ notice or payment of pro-rata salary in lieu thereof probation and by giving one month’s’ notice or payment of one month’s salary in lieu thereof after confirmation by either party, except in case of dismissal, discharge or termination of contract.”

While the policy is standard, employees argued that they weren’t informed in writing and only verbally on phone calls. The multiple conversations with these employees showcase that the company has considered neither ratings nor business-fit, as several of these employees said they had a rating of over 3.8 and others have been master trainers or even star performers in the past.

Cultfit’s Tier 2 Centres Shut Down

Employees from Indore and Ahmedabad centres corroborated details about layoffs and shutdowns of Cultfit centres in these cities. A trainer in Indore told us that the HR executive that had called them on May 1 asked them to submit resignation by the end of the day, failing which their contract would be terminated. Employees have been offered 45-days severance pay, with the option of ending their contract on May 31 or June 15, with a different date for final pay settlement in each case.

When the employee at Indore requested for a transfer, the HR said that the company is facing losses due to lockdown and is also shutting down centres in high-value cities such as Mumbai. In Mumbai, Curefit is said to be shutting down six of the 16 centres it operates, including new ones in Mumbai’s Khar neighbourhood. In Indore, Cultfit has a single centre with 10 employees while in Ahmedabad it has two centres with 12 employees.

Several Curefit trainers, as well as customers, also highlighted the layoffs and the sudden termination of contracts on social media.

Employees have also created a WhatsApp group to discuss how they can help each other amid the crisis. Some have also reached out to ministries for help.

In response to Inc42 queries on the matter, Curefit confirmed that it has downsized its employee base across markets where it has shut operations and has initiated pay cuts across levels. The company confirmed the layoffs, however, declined to comment on the number of employees impacted.

“The founders have taken a 100% pay cut, the management team 50% and the rest of the staff depending on seniority have a reduction of 20 to 30%,” the company said.

“90% of the cult trainers continue to be with us and have been moved to a fixed plus variable model to tide over the crisis. All employees part of the downsizing have been provided with a significant severance package to help them with the current situation, including extended health insurance for them and their families. Further, we will provide our full assistance in out-placing them in the coming days. We have also created an emergency fund of INR 2 Cr to support affected employees in the coming months,” the company spokesperson added.

However, at least 10 employees that we spoke to denied hearing anything about health benefits, outplacement services and the emergency fund. They also disputed the “significant” severance that Curefit claimed it has offered.

Employees said they haven’t heard anything beyond 45-days severance and the health insurance extension till July 31. They reiterated that those serving the lay off notices have repeatedly warned them about resigning or losing out on the severance package too.

Virtual Training Becomes Curefit’s Core Focus

With the Covid-19 crisis impacting every business sector, layoffs aren’t surprising these days. But in the case of Curefit, there are few major concerns — the company had secured big funding recently and given the traction for its virtual classes, it would still need to have personal and group trainers.

The company had received $110 Mn in funding led by Singapore-based Temasek on March 21, just days before the lockdown was announced on March 24, 2020. Curefit soon shifted to virtual fitness classes and even launched a challenge to allow people to complete a day’s training for which it would donate to the PM-CARES fund. Curefit claims to have donated INR 5 Cr to the PM-CARES fund through this challenge.

In its internal communication with the team, Curefit has repeatedly said that virtual classes have grown with a million new users, of which 80% were not members.

To drum up hype, Curefit had roped in celebrities for the virtual classes, which is a major point of contention for employees, who complain that if the company can pay for celebrity endorsements, it can also pay employees.

With the success of the free virtual classes, Curefit is looking to expand it into its primary revenue source. The company is now working on paid one-on-one personal training classes with third-party trainers, who will be working on a commission model. It is also working on a group fitness product which will also be a paid product. These products are expected to be launched in mid-May.

So it won’t be needing as many trainers as it did earlier with a wide physical footprint, but it does impact those in smaller cities who had been employed with Curefit since a trainer in any city can take virtual classes for customers anywhere in the world. So if the virtual fitness culture is here to stay beyond the lockdown, Curefit’s pivot could be seen as a precursor to more upheaval in the Indian gym and fitness market.