Revoking job offers gets Grofers into legal tangle

As start-ups go through a consolidation phase, employee cost is the first on the firing line   -  Shutterstock.com

Mumbai, July 29





Bipasha Sen, a fresh graduate from Motilal Nehru National Institute of Technology, Allahabad, was thrilled when she received a job offer from hyper-local grocery start-up Grofers early this year.

Her annual package of ₹8 lakh was higher than many of her peers, which ensured that the college didn’t allow her to sit for any other placements. She flew from Bahrain on June 29 to join Grofers on July 1. She was among 67 others from various colleges who were supposed to join the company on the same day. 

Grofers had booked stay for her and others at OYO Rooms in Gurugram for the first few days, and she received the confirmation on June 27. But on June 30, while she was returning from her parent’s home in Kolkata, she received a brief mail from Grofers — the company had revoked her offer, blaming market conditions. 

“I had already booked an apartment in Gurugram and had even paid the deposit. I felt completely cheated because just a week ago, I and seven others from my college had communicated with Grofers about the joining details and nowhere did they mention that they’d be revoking the offer,” Sen, who is still unemployed, told BusinessLine

Sen and several others who had already relocated to Gurugram to join Grofers and had spent significant money in the process are now taking a legal course to get their promised jobs back or be compensated. 

New Delhi-based legal-tech start-up MyAdvo, which is helping these students with the legal process, said such situations often go unaddressed as students are generally unable to take any action.

Vasundhara Shankar, Legal Head, MyAdvo, said: “It is refreshing to see that students are willing to take action against big companies and that services like MyAdvo exist to help people understand their legal rights and take legal action, which otherwise is an impossible task for an individual in the current scenario.”

Grofers founder Albinder Dhindsa did not respond to calls and emails from BusinessLine in this regard.

Stand-off with start-ups

Stand-offs between colleges and start-ups have been in the news ever since the poster-boy of Indian start-up world, Flipkart, deferred offer letters of about 15 graduates from IIM-Ahmedabad. Meanwhile, another major e-commerce player, Snapdeal, also laid-off about 40 per cent of its total headcount in the last few months.

Among many well-funded start-ups, TinyOwl, which got merged with Roadrunnr last month, had also laid off over 300 employees. Helpchat, PepperTap and LocalOye have also had similar issues.

Interest to join start-ups was at its peak a few years ago among students at a time when the investor sentiment was also at its highest, and the whole start-up ecosystem was flushed with funding, said Maanendra Singh, Managing Partner (India) at recruitment and consultancy firm Antal International, pointing out that things have now taken a downward shift.

“Many colleges have already decided to bar start-ups from campus placements, citing such incidents. We have seen a 40-per cent drop in applications for start-ups. At senior positions, the drop is as high as 60 per cent,” Singh said.

According to experts, the start-up ecosystem is going through a consolidation phase, which also means that many companies are either folding up or getting merged. In such a scenario, employee cost is the first on the firing line. Companies either start laying-off or revoke offer letters.

Singh said that while many of these start-ups have grown their operations quite rapidly, the same is not reflected in their balance sheets, which are still very poorly managed. That, combined with the increased difficulty to raise fresh capital, is forcing these companies to take abrupt decisions such as mass firings or not honouring their hiring commitments.

Published on July 29, 2016

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