EXCLUSIVE: OYO sends employees in India on leave without pay for 4 months and announces pay cuts for many

• On Wednesday morning, in a townhall meeting, OYO announced that some of its employees will be put on leave without pay for four months starting May 4.
• It has also announced a 25% pay cut for all employees starting from April.
• Earlier in April, OYO had put hundreds of employees in the US on furloughs while promising no such moves in India until lockdown. The furlough in India begins a day after lockdown ends.

On Wednesday morning, OYO employees were asked to join in for a townhall meeting. With the coronavirus pandemic and layoffs happening all around, employees of the troubled company in a troubled sector - knew something was wrong. And their worst nightmares came true.

OYO said that some of its employees will be put on ‘leave without pay’ for four months starting May 4, a source told Business Insider. It also announced a 25% pay cut for all employees starting from April, said another source.

In an email, a copy of which Business Insider has viewed, OYO India CEO Rohit Kapoor said, “Today, our company is taking a difficult but necessary step for India, whereby we are asking all OYOpreneurs to accept a reduction in their fixed compensation by 25%. This will be effective for April-July 2020 payroll.”

OYO has said that all other benefits will remain the same and the pay cut will be made in a way that ‘the fixed compensation for any employee is not less than ₹5 lakh per annum’.

Kapoor also mentioned that OYO employees will be put on a ‘leave with limited benefits’ as it will continue to provide them with medical insurance, parental insurance, ex gratia and more. “In case there is an unforeseen medical emergency, we will support beyond the insured amounts, if the need so arises,” he assured, in the email.

OYO had earlier said that its Indian employees will remain unscathed during the lockdown. On April 8, OYO said that while employees in the US will be placed on furloughs, Indian jobs are safe.

It had said, “Keeping its promise to the government and people of India, no measures in India till lockdown”.

Interestingly, employees have been placed on leave without pay from May 4, the day after lockdown is scheduled to end, in India.

However, OYO has said that it continues to ensure employees remain least impacted even while the company faces major issues because of lockdowns across the world.

“At this point in time, OYO is not doing any job cuts despite the economic pressures. Based on the advice of hundreds of OYOpreneurs I have been in touch with, the key priority is that we do everything possible to minimize job losses. We can keep job cuts at bay through a combination of lowered work weeks, pay cuts, temporary leave of absence until business recovers and other such measures. Our goal is to ensure long-term sustenance of our business, which is critical for the industry’s recovery as well," Kapoor said in his email.

Double trouble for OYO because of Covid-19

For months, OYO has been dealing with issues like hotelier complaints for delayed payments and unhappy consumers. And, the coronavirus pandemic has only made things worse.

The company also laid off employees barely three months back. In January 2020, as a part of its reorganization strategy to cut costs, OYO laid off a third of its US staff along with 800 employees in India.

In a video message to its employees in April, founder Ritesh Agarwal said that he cannot imagine any other industry being worse impacted than travel, tourism and hospitality due to coronavirus. Earlier, Agarwal had estimated a 15-20% drop in revenues and occupancy over Covid-19. Later he himself said that its revenues dropped by over 50%-60% globally.

“OYO’s occupancy rate is down from 70% to 10% in India,” a source told Business Insider.

"As you all know, this situation of COVID-19 comes at a very unique time for OYO. This is right after we had a sizeable restructuring of our company in January of this year. Due to that, I want to clarify for all of you that we intend to do no or negligible layoffs as a part of cost restructuring across the world," Agarwal had said in his message.

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