Kingfisher fails to value employees
The new Companies Bill will empower employees of companies to join together and seek appropriate relief
Agitating employees have been in the news lately. Most notably in China at Foxconn, the maker to the world of all things digital, including the Apple Inc iPhone. Foxconn employees have been protesting against unfair wages and oppressive working conditions over the last couple of years. The recent brawl leading to a halt in production at the plant shows how unhappy employees can resort to violence when pushed into a corner. Incidents of this kind can cut into a company’s profits, tarnish the image of the entity and can also impact the value of publicly listed companies, thereby directly affecting shareholders’ interests.
Kingfisher Airlines Ltd has been the most consistent offender in the ‘worst employer’ category in India this year. The recently reported suicide of an unpaid employee’s wife is exceedingly sad and is directly related to the failure of Kingfisher to pay salaries. And while employees have been suffering for months without salaries, chairman Vijay Mallya and CEO Sanjay Aggarwal have been seen to still roll with the good times, laying the blame on striking employees for problems in turning around the business. Expecting employees to continue working with no pay for months on end and with no definite plans to come through on salaries defies logic and reeks of exploitation.
Employees can be a company’s best resource and happy employees are the drivers of many successful businesses. The birth of solely digital-based companies saw employers falling over themselves to treat their employees well in order to spur productivity and prevent attrition. Google is largely seen as the company that offers the best perks to its employees. Such practices add to a company’s value and shareholders are best served when companies manage not only their business affairs well but also treat their employees fairly and equitably.
Paying salaries on time is every company’s absolute duty. Failure to do so can be viewed as gross mismanagement. The Companies Bill, if passed by Parliament, is set to become law later this year replacing the archaic Companies Act of 1956. The new bill will finally allow class action suits in India. Class action suits will empower employees of companies like Kingfisher to join together and sue their employer to seek appropriate relief.
Class action suits will also open the door for shareholders to examine actions by companies like Kingfisher in exploiting employees, jeopardizing the safety of passengers and bringing down the value of the company. Class action suits will strengthen the hand of shareholders to seek relief in cases such as these to hold management accountable for loss in company value.
Of course, given the delays in seeking any relief in Indian courts, it remains to be seen if such cases will actually deliver timely justice
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