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Hotels won’t cut salaries, ask staff to go on leave



NEW DELHI: Staring at huge losses, hotel chains and restaurants are refraining from announcing any harsh measures and are instead encouraging staff to go on leave till March 31 following an advisory by the ministry of labour and Employees’ State Insurance Corporation (ESIC) to not cut salaries or resort to layoffs of employees amid the Covid-19 outbreak.

After the televised address by Prime Minister Narendra Modi on the outbreak on Thursday, in which he urged the business community not to cut staff salaries, the ministry of labour and employment and ESIC sent out an advisory stating that ESIC requests all employers not to cut salaries of employees who are unable to work.

As a result, a mid-market chain, which had decided on a 25% pay cut for its employees, decided to wait for some time before going ahead with the plan, said people aware of the matter.

“The notification by the labour department has made hotel chains wary of making any announcements immediately. There are state closures and shutdowns amid the outbreak. So, any immediate announcement by the chains at a time like this will appear to be counter-intuitive,” said an executive, who did not wish to be identified.

Hotels and restaurant chains said they are hoping for a swift response from the government on their suggestions before they undertake any drastic measures.

“We have written to the government to come to the rescue of at least marginal workers who are covered under ESIC. ESIC is sitting on a huge corpus. They can help the sector. If they don’t get back, we will have to take a pay cut because we can’t survive,” said Anurag Katriar, president, National Restaurant Association of India.

“We know we will have to take some measures. Salaries are due on March 31. We will take a call around or post March 31. We have sent everybody home for now. We will be in touch with them,” he said.

Mandeep Lamba, president, South Asia, at hospitality consultancy HVS Anarock, said there will have to be some inevitable economic sanctions as hotels are shutting down left, right and centre. “People are grappling as of now. Hotels are shut. Staff members have gone home. It will take a while to restart,” he said.

Prashanth Rao Aroor, CEO of mid-scale hotel chain IntelliStay Hotels, which owns the Mango brand, said the company had been forced to shut down in many locations since Friday last week.

“We have kept seven-eight people in our hotels to manage the asset. The rest are on leave. Since we have an asset light model, we have a large corporate office. For one or two months we are committed to keeping our people on the rolls. We hope we can sustain that,” said Aroor. “But even during this period, the government will have come up with some sort of subsidies to make things viable. It’s not a question of willingness. It’s a question of ability. If it goes on for more than a quarter, we can’t sustain.”

Ankur Bhatia, executive director at Bird Group, which runs Roseate Hotels & Resorts, said because the financial year is ending, a majority of companies have encouraged staff to take leaves that will expire in the financial year. “They will also encourage them to take next year’s leaves till April 15 because those will be unproductive days,” he said.

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