The labour ministry said that Paytm also agreed to not claw back the joining bonus of the ex-employee
This comes a day after the regional labour commissioner office of Bengaluru summoned Paytm over alleged forced termination of employees
Multiple ex-employees of Paytm moved the ministry in June, alleging “unlawful termination” without compensation
Disposing of a petition filed by a former Paytm
employee, the labour ministry on Wednesday (July 10) reportedly said that fintech major has agreed to not recover the joining bonus from the aggrieved employee.
As per Economic Times, the ministry said that Paytm also agreed to pay the notice period payment to the ex-employee. The development came to pass after Paytm representatives appeared before the regional labour commissioner of Bengaluru.
“The representative of the management of Paytm appeared before the regional labour commissioner, Bengaluru on Wednesday and agreed not to recover the joining bonus and to pay the notice period payment to the employee… The employee accepted the exit offer made by Paytm in the presence of the regional labour commissioner (central), Bengaluru,” said the ministry.
It added that the grievance was resolved to the “satisfaction of both parties”.
This comes a day after the regional labour commissioner office issued a notice and summoned Paytm over alleged forced termination of employees.
The directions came close on the heels of a major restructuring exercise at Paytm, which saw mass layoffs across the board. As per Inc42, at least 500 employees were impacted by the exercise.
As a result, multiple former Paytm employees knocked on the doors of the ministry last month, alleging “unlawful termination” without compensation. They sought reinstatement of their employment.
Earlier, multiple ex-employees told Inc42 that the company’s HR team warned them to resign voluntarily or face disciplinary action towards the end of May 2024. They also alleged that the company was withholding their joining and retention bonuses.
The fintech major previously attributed the layoffs to artificial intelligence (AI)-led automation within the company. While announcing the startup’s financial results for the fourth quarter (Q4) of the financial year 2023-24 (FY24), Paytm CEO and founder Vijay Shekhar Sharma said that the cost efficiencies on account of AI-led automation would result in savings of INR 400 Cr-INR 500 Cr annually.
It is pertinent to note that the fintech major was thrusted into uncharted waters earlier this year after the Reserve Bank of India barred Paytm Payments Bank from undertaking any deposits or credit transactions, or top-ups in any of its customer accounts. It also banned the bank from offering other banking services, such as UPI facility and fund transfers.
The aftermath of the regulatory action saw a bloodbath on the bourses as Paytm saw heavy selloff by investors. On a year-to-date (YTD) basis, the stock is down over 25%. It has fallen more than 43% in the past 12 months.
Paytm’s net loss widened over 3X year-on-year (YoY) to INR 550.5 Cr in Q4 FY24 from INR 167.5 Cr reported in the year-ago period. Operating revenue also fell 2.9% YoY to INR 2,267.10 Cr in the quarter ended March 2024.
Shares of Paytm ended today’s trading session 1.14% higher at INR 467.05 on the BSE.
