Leave Without Pay: IT firms tell employees to take LWP, resign amid Covid-19

By Amritha Mohan  Published on  6 Jun 2020 1:30 PM GMT
Leave Without Pay: IT firms tell employees to take LWP, resign amid Covid-19

Hyderabad: Even as KTR, Telangana’s Minister for IT, asked IT companies not to lay-off employees in Hyderabad, earlier in April, few companies in the city have adopted different ways to cut costs and let go of extra workforce amid the COVID-19 pandemic. One of the ways has been to ask employees to go on a mandatory Leave Without Pay (LWP), and later provide them with the relieving letter, regardless of whether their pending salary dues are paid.

LWPs are usually taken by employees who need to take a leave for personal reasons or higher studies, but don’t want to lose the job also. However, in the wake of the COVID-19 pandemic, companies have used LWP to warn employees about termination.

Anandi*, an employee at an edu-tech firm in Hyderabad, said that her company has ‘laid-off’ around 650-750 employees, however in a phased manner, by asking them to go on an unpaid leave. “In the first week of April, we received a mail regarding the salary cuts. Two weeks later, they asked us to go on LWP with effect on the very same day. There are employees who have rents, EMIs to pay, families to feed, so dropping this information suddenly was harsh,” she said.

In addition to this, the employee also said that the company has not provided any reason as to why they were chosen to be laid off in particular. “Employees on LWP don’t necessarily have to maintain the notice period. While the company told us that they will take us back once the COVID-19 situation stabilises, we had to expect that it was our cue to leave the organisation. From my experience, LWP means they do want you to resign,” she added.

Considering the COVID-19 situation in hand, Anandi began to look for other jobs as soon as she received the LWP mail from the company. “Luckily, I got a new job, but there are others who have been less fortunate, and had waited for the company with the hope that they would be taken back,” she said.

‘LWP is like a win-win for the company and employer’

According to Sundeep Kumar Makthala, president of Telangana Information Technology Association (TITA), giving the LWP option to employees is like a win-win situation for both the worker and the company. “If a company requests a worker to go on LWP, the company gets to show that the person is still an employee of the company, but without the financial liability. On the other hand, the employee is free to start looking for other options, without the baggage of resignation. But the employer has to provide reason as to why they chose to give LWP or terminate an employee, and adequate time for them to explore their other options” he said.

There is no legal framework pertaining to LWP, similar to the Performance Improvement Plan (PIP), which are usually norms defined by the company. “IT companies use PIPs to rate the performance of an employee and later terminate them based on the rating. LWPs can also be considered a termination mechanism, but with much less consequences to the employee,” he said.

He also added that companies will take care to ensure that employees resign voluntarily, because if the involuntary attrition rate exceeds more than 1.75 to 2 percent, they are expected to show reasons as to why the attrition rate has increased, to the Labour Commissioner. “Getting a relieving letter is preferred because it comes with benefits, as opposed to termination. So if relieving comes with an LWP, employees just take it, because there are not much options left especially during a pandemic,” he added.

Hyderabad has around 6 lakh IT employees working in around 1,500 companies across the city. With biggies like Ola, Uber, Swiggy, Zomato laying off employees, many industries not directly related to to health vertical are facing losses due to the pandemic.

*name changed

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