Oyo Hotels and Homes on Wednesday told its employees to take a 25% cut in salary for April-July period, while also placing some employees on leave with limited benefits for four months from May 4, a day after the lockdown ends.
The move follows a recent video message by the company’s founder and group CEO Ritesh Agarwal wherein he had said that a ‘significant’ number of employees across the world will be placed on temporary leave, or furloughs, of a minimum of 60-90 days as Oyo’s revenue had dipped 50-60% due to COVID-19 outbreak.
In an employee town hall on Wednesday, Rohit Kapoor, CEO, Oyo Hotels & Homes, India & South Asia, said the company is taking all necessary actions to mitigate COVID-19’s impact and ensure long-term success and sustenance of the business, while making certain that “there are no job cuts in India, despite the economic pressures.”
However, he added that these efforts may not be enough as the extent and projected period of the crisis is highly unpredictable.
In an email to employees — seen by The Hindu — following the town hall, Mr. Kapoor said, “Today, our company is taking a difficult but necessary step for India, whereby we are asking all OYOprenuers to accept a reduction in their fixed compensation by 25%.”
He added that this will be effective for April-July 2020 payroll and all other benefits and terms of contract will remain unchanged. “Also, note that this action will be planned in such a way that post the proposed pay cut, the fixed compensation for any employee will not be less than ₹5 lakh per annum. This ensures a large percentage of our colleagues at lower pay scales see no impact,” Mr. Kapoor added.
Further, he added that some OYOpreneurs, or employees, will be placed on a leave with limited benefits from May 4, for four months until August 2020. Those going on this leave will avail them benefits such as the continuation of medical insurance and parental insurance, school fee reimbursement and ex-gratia support.
“I understand that these are not easy developments for any of us; they have certainly not been an easy decision for the leadership team to make...In my working career, this is the fourht global business crisis I have seen — things always look bleak in the short run, but human endurance ultimately triumphs often, sooner than we believe,” Mr. Kapoor said.
He added, “I am confident that with all the actions we are taking, we will be in a good shape to take on the opportunities that the post-COVID world will have to offer. OYO’s offerings are as relevant to millions of guests today as they were pre-COVID.”
In a video message about two weeks back, Mr. Agarwal had said that the revenue and occupancies of Oyo had dropped by more than 50 to 60% due to which the company’s balance sheet had come under severe stress. “The economic impact brought by COVID-19 is dramatic and has impacted every industry... I cannot imagine any other industry that is worse affected [than] travel, tourism and hospitality,” he had said.
