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Covid led several firms to cut salaries by up to 50%, while some even retrenched a large portion of their workforce. (Bloomberg)
Covid led several firms to cut salaries by up to 50%, while some even retrenched a large portion of their workforce. (Bloomberg)

Companies restore pay, bonuses as tide turns

  • Many companies have decided to restore salaries despite business uncertainty and headwinds, say experts

Indian companies are starting to restore employee salaries that were cut due to the severe business disruptions from the pandemic and lockdowns, and are also offering incentives to workers amid a gradual recovery in the economy and pickup in business activity.

While most of these companies are seemingly benefiting from changed consumer behaviour due to the pandemic, there are, however, growing instances of those that continue to be in cash-conservation mode but are still rewarding their staff.

For instance, Pune-based engineering services firm Forbes Marshall has fully rolled back pay cuts and restored salaries to pre-covid levels. Last month, hospitality firm OYO restored full salaries of its staffers in India and South Asia. Pay cuts for OYO employees with fixed annual compensation of up to 8 lakh have been reversed from 1 August while the rest, it will be restored in a phased manner from October. In the ed-tech space, startups Upgrad and Toppr have restored pay.

Covid led several firms to cut salaries by up to 50%, while some even retrenched a large portion of their workforce.

Industry experts said many companies have decided to restore salaries even though uncertainty and economic headwinds remain.

“The markets are still reeling under a cash crunch. So, all companies are not doling out cash components as rewards," said Amit Agarwal, managing partner, regional leader Asia Pacific-CFO and financial executive practice, executive search firm Stanton Chase India. He said companies are, however, issuing employee stock options and converting bonuses into long-term retention plans. This comes on the back of the Indian economy picking up pace with higher property registrations as well as retail payments, 35% growth in sales of major carmakers in September, GST receipts of 95,480 crore last month and higher e-way bills and toll collections.

“Companies understand they need to retain employees. So, professional companies that are seeing their business picking up are restoring salaries," said Jyoti Bowen Nath, managing partner of executive search firm Claricent Partners.

In cases where pay cuts have not been fully restored, it would be done so in the coming months, said HR experts, advising these companies.

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