July 21, 2020

Covid Impact: IndiGo to lay off 10% of its workforce

[ by Legal Era News Network ]


The Covid-19-induced economic turbulence has led airline major IndiGo to decide to lay off 10% of its workforce.

According to IndiGo CEO Ronojoy Dutta, the company after carefully assessing and reviewing all possible scenarios, will require to bid “a painful adieu” to 10% of its around 27,000-strong workforce.

“It is for the first time in the history of IndiGo that we have undertaken such a painful measure. This is indeed a very unfortunate turn of events from the optimistic growth trajectory we had carved out for ourselves just six months ago; but this pandemic has forced us to re-evaluate our best laid plans.”

“To help the impacted employees’ tide over the uncertainties emanating from this decision, IndiGo has created a ‘6E Care package’,” Dutta said in a note.

Dutta said the current pandemic has impacted many industries around the world, among which aviation has been one of the sectors that has been hit the hardest.

“Even now, IndiGo is flying only a small percentage of its full fleet of 250 airplanes. This has been one of the toughest decisions that we have had to take and we are ensuring that the transition process for the impacted employees is carried out seamlessly, professionally and with the utmost respect and compassion,” he said.

“Right at the start of this crisis, IndiGo understood the gravity of the situation. For us, it was critical to minimise the impact of the pandemic on our employees, and in fact IndiGo was one of the few airlines globally which paid full salaries for the month of March and April, despite the disruption in business,” Dutta added.

Subsequently, the airline instituted a number of measures such as pay cuts, leave without pay and various other costs; but unfortunately, these cost savings were clearly not enough to offset the decline in revenues.

“And from where things stand currently, it is impossible for our company to fly through this economic storm without making some sacrifices, in order to sustain our business operations,” he said.

He added, “In the meantime we are flying 30% of our capacity and carrying the costs of a much larger airline and clearly it would be irresponsible of us not to try and bring the two into closer balance. The long term stability of our company requires us to take some near term cost reduction measures. We have already taken a number of measures such as Pay Cuts, Leave Without Pay and various other cost reductions but unfortunately these cost savings are not enough to offset the decline in revenues.”

According to Dutta’s statement, the company has offered a generous separation package to facilitate the laid-off employees transition to a new job.

Financial support

 Notice pay in lieu:  Impacted employees will be paid notice pay in lieu of serving notice applicable to them. This will be calculated on the gross salary, basis the employee’s notice period.

Severance Payment: In addition to notice pay, impacted employees will be paid a severance pay which will be calculated as one month of CTC for every completed year of service, subject to a maximum of 12 months. This will lead to higher cash in hand in comparison to calculations on Gross salary.

At a minimum, an impacted employee will receive at least 3-months’ gross salary, including both the above payments. Of course those will higher tenure with the company will receive more as per the above calculation method.

Annual Bonus / Performance Linked Incentive (PLI) (for Non- crew), FY 2019 – 20 : Payment of bonus / PLI shall be made when the Company decides to make this payout to the rest of the employees in this financial year, even after the impacted employee’s exit.

Longevity Bonus (Crew): For year 2020, longevity bonus shall be paid along with Full and Final to eligible Cabin Crew members.

The company would also be paying Leave Encashment, if any and also Gratuity, as applicable per Payment of Gratuity act.

Medical Insurance

The Company has also decided to extend the Medical Insurance coverage for impacted employees until December 2020 and has given a provision to continue with the policy post December 2020 as per applicable market rates.

Professional Support

To assist the laid-off employees in their future careers, IndiGo has extended its support to the impacted employees which has been termed as the ‘6E Career transition support’ by which the company will provide the impacted employees, an “Outplacement Allowance” to support them seek professional help to explore career opportunities, outside IndiGo.

6E Talent Directory: IndiGo shall maintain a directory of the laid-off employees. On resuming back to normal operations, it shall give first preference to such impacted employees before opening such positions to other applicants.

Recommendation letter: Each employee who is made redundant will receive a personalized recommendation letter to vouch for their professional credentials.

The company would also be assisting the impacted employees with a one way confirmed air ticket should they need to travel back to their hometown or base location.

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