Companies

Jet Airways resolution plan may not get staff support

Forum Gandhi Mumbai | Updated on July 10, 2021

Employees likely to seek relief from the National Company Law Appellate Tribunal

Jet Airways’ revival is facing headwinds as 95 per cent of the employees are unlikely to vote in favour of the resolution plan.

Not only that, the employees have now written letters to the Labour Ministry, the Civil Aviation Ministry and the regional labour commissioners.

Sources say employees are also likely to seek relief from the National Company Law Appellate Tribunal.

The All India Jet Airways’ Officers and Staff Association has written three separate letters to the Ministry of Civil Aviation, the Ministry of Labour and the Regional Labour Commissioner (Central) regarding gratuity claims and payment dues. The unions have sought a meeting with the Murari Lal Jalan and Kalrock Capital consortium.

This comes even as the National Company Law Tribunal cleared the proposal submitted by the consortium on June 22.

While different categories of creditors made claims of about ₹40,200 crore, the consortium had offered to settle claims of ₹ 475 crore of financial and non-financial creditors.

Banks would be getting ₹385 crore against their total claim of about ₹7,800 crore, translating into a haircut of about 95 per cent.

Employee claims

Though employee claims worth ₹1,265 crore were admitted, the consortium has proposed merely ₹ 52 crore to settle all their claims.

Kiran Pawaskar, President of the Association, alleged that the settlement proposal is a “complete mockery of the process and has neglected the rights of the workmen, staff and officers completely to the extent that we have been brought to complete penury.”

While revival of the company under IBC is important, Pawaskar observed that the outcome has been extremely shocking and hurting to the Association’s members.

The Association’s letter said there was no reference to the claims of the employees in the resolution plan and “a very paltry amount has been proposed as a resolution in the IBC process.”

In its letter to the Regional Labour Commissioner, the union requested the authorities to consider their application for gratuity and other dues payable to the employees (notwithstanding the order of the NCLT) as the Payment of Gratuity Act is a social legislation, and is an entitlement to eligible employees and is covered to the establishment of Jet Airways.

As per the labour laws, gratuity is an amount which has to be compulsorily paid. The company is 26 years old, and there are thousands of employees who have worked with the company since its inception.

The consortium has offered cash and non-cash benefits including 0.5 per cent equity stake in the airline to those who were on the rolls of Jet Airways till its insolvency in June 2019.

Ground handling subsidiary

It had proposed a 76 per cent stake in its ground handling subsidiary. Employees and workmen would be paid ₹11,000 and ₹22,800, respectively, along with each of the workmen being given a phone, a laptop or an iPad through a lottery basis and ticket vouchers worth ₹10,000.

At its peak, the company had close to 22,000 employees on its rolls, including 6,000 contact staff. Even today, there are close to 2,800-3,000 employees on its rolls.

However, only 200 of these employees were in the asset preservation team. Only 50 of the existing staff will be absorbed in the airline and the rest will be transferred to the ground handling subsidiary as a part of the resolution plan.

In case, 95 per cent of staff do not vote in favour of the proposal it will automatically lapse. The 0.5 per cent stake reserved for the staff and ₹8 crore allocated for making cash payments to them will be given to financial creditors.

Sources said that at least one of the unions are likely to approach the NCLAT for an appeal.

Published on July 10, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.