How Should We Handle Employee Backlash if We Stop Offering Breakfast and Transport?

We are part of a prestigious and very old industrial house that believes in employees' welfare from day one. One decade ago, we started from a green field. At that time, to attract and retain employees, we introduced breakfast in the canteen and a transport bus from the neighboring town as our factory was in a remote area.

Initially, the scheme ran very well, but in the last few years, workers have come to assume that these are their rights, and the employer can't discontinue them. The excessive involvement of workers in both services is creating a nuisance, and significant efforts are being made to run both services smoothly.

Repercussions of Discontinuing Services

What could be the repercussions if we spread the message to discontinue both services? Neither in the appointment letter nor in the standing order have we mentioned these facilities. Seniors, please guide on how to handle the situation as "Welfare is becoming Farewell" for HR people.

Employee Welfare and Company Policies

Nothing should be given in a company for free, especially to employees. Whenever you want to introduce anything related to welfare, please do so in consultation with the employees who will benefit from the welfare scheme provided by the employer. If you try to stop the facility, employees will likely resent or oppose it. If this facility has been provided for a significant period, it has become part of the service conditions of their employment, so any changes to it must be implemented by issuing a notice under Section 9A of the ID Act. It is advisable to consult with all employees and try to convince and negotiate with them to receive something in return for the free facility.

In the future, ensure that nothing is provided to employees in the name of welfare for free; always try to receive something in return related to discipline, productivity, or the quality of the company. Wishing you success. Please update and share with us your stance and the outcome of the same.

I don't think the ID Act would be involved here if it is not part of any written offer. It would be better to make the services complimentary or charge a minor fee for older employees, say after 3 years of service, and start charging new employees on a no-profit-no-loss basis initially in the name of employee welfare.

You have clearly mentioned that your organization is a prestigious industrial house with a belief in employee welfare. You have also stated that this facility was introduced to attract people rather than as a welfare measure. I think your organization is not interested in stopping these facilities. The issue seems to be 'EXCESS INVOLVEMENT OF WORKERS' in running these facilities rather than the cost. Cost could go up if there is excess involvement.

The fact that the organization is just 10 years old indicates that the average age might be around 28. When we talk about a group, we talk about four stages:

1. Forming
2. Storming
3. Norming
4. Performing

The same is applicable to any process to settle. I guess the organization must have formed some committees in the last two to three years to manage these facilities. It will go smoothly in the initial stage. You might be facing the Storming stage. If you can manage this stage well, which involves education and counseling, the issue will be resolved. The moment you look and address workers as "They" and the Management as "We," the gap widens.

Firmness and perseverance are the keys. Rigidity and impatience should be carefully avoided while managing the Storming stage.

Thank you for your input. We are deducting 1/10 of the cost from their salary, with the remaining amount being borne by the employer.

Streamlining the Process for Genuine User Involvement

How can we streamline this process while ensuring genuine user involvement?

The Importance of Justifying Withdrawal of Employee Facilities

My views on facilities, once given, and that too for a long period, cannot be withdrawn without justifying suitably. Welfare facilities are extended to the employees by the organization with a view to facilitate comfort for the employee so that they can contribute better towards organizational goals.

As an HR professional, I understand your difficulties but would like to suggest taking sufficient time to implement decisions that may bring negative thoughts to employees' minds, potentially affecting the organization's work progress. Even if withdrawing extended facilities does not violate any labor laws, the long-term effects on the organization's work progress always matter. Employees can be taken into confidence, counseled, and by forming a group, the desired option can be achieved.

Understanding Welfare Measures in Industrial Settings

Learned members like Mr. T. Sivasankaran have already provided valuable insights regarding the issue based on their practical wisdom. As a former conciliation officer with ample experience handling industrial disputes, including those stemming from seemingly minor issues such as poor food quality in the canteen or unprofessional behavior from canteen staff, I would like to share my perspective on this matter with the forum.

Purpose of Welfare Measures

Why do managements initiate so-called 'welfare measures'? Is it to bridge the gap between 'real wages' and 'money wages' for workers out of compassion, or to enhance their mobility both within and outside the factory premises? Consider the fleet of buses operating in and around Sivakasi in the early hours, like the "KUTTY JAPAN" mobilizing labor from the vicinity. In the realm of business, especially in large-scale production and marketing, profit is vital. Maximizing profit involves prudent cost-cutting strategies, with labor costs being one of the most negotiable aspects.

Apart from the underlying motive of boosting productivity at all costs, welfare measures like canteen services and transportation facilities are introduced and maintained to gain a competitive advantage in negotiations, as Sivasankaran astutely pointed out. So why complain that welfare is turning into farewell?

Clarifying 'Excess Worker Involvement'

When you mention 'excess worker involvement,' it's unclear what you mean precisely. Is it excessive utilization of canteen facilities at a 90% discount, leading to food wastage, or unauthorized use of transportation by boarding and alighting at unscheduled stops, or perhaps issues related to representation in the canteen committee?

Respecting Workers' Intelligence

Comparing workers to dogs by giving them excessive benefits is inappropriate. Workers possess innate intelligence and should not be underestimated. Engage in introspection and, as a conscientious HR professional, seek out effective solutions to address these challenges.

Best regards.

A few years back, I faced a similar situation where similar facilities were offered by management. However, later, a few destructive minds interfered with the arrangement to seek additional benefits. This eventually led to a worst-case scenario, akin to a wet blanket—something you can use but not discard, and too heavy to carry. At that point, I decided to discuss the issue with the chairman, and I would like to share his solution with all of you.

Chairman's Solution

He explained that providing the facility comes with its own cost. If we were to stop it, there would be a different cost in the form of resistance, demotivation, and the strengthening of destructive minds that could harm the morale of sincere employees. Our problem was struggling to satisfy the employees, despite spending a significant amount of money.

His solution was to declare this as a hardship allowance, not on a monthly basis but calculated based on the days attended. Surprisingly, for each employee, this amounted to 365 days - 52 weekly offs - 30 leaves - 15 holidays, which totals to 265 days. By implementing this, we saved on setup costs and minimized wastage.

Moreover, this approach effectively neutralized the influence of destructive minds, which had been our major challenge.

Best regards,
[Your Name]

Prashant & Himanshu Bhushan have given you practical tips on how to handle the situation you mentioned. While the way such situations are viewed by different parties varies widely—depending on their perception and not how the management wants them to view it—it also presents challenges to the HR functionaries to handle them with tact. The only way, as I see it, is to make the employees see the whole affair from another perspective/angle that is also in their interest, in the long term—and that can only be shown to them by HR. If one leaves such situations [by intent or otherwise] to the employees themselves or the senior management officials [only by virtue of designation/hierarchy], things are bound to go from bad to worse.

Request for Detailed Explanation

Himanshu - I join V. Rangarajan in requesting you to give the details of 'how' you handled changing the perceptions among the employees. The focus needs to be on the 'how' aspect, since the 'what' and 'why' aspects are clear.

Regards,
TS

First of all, I would like to say that in any manufacturing or business organization, production comes from workers. Organizations need the workers to earn for them. Workers do not need the organization to earn for them. Withdrawing the facility is not good practice. In the beginning, facilities are offered in expectation of some additional gains. Once things are smooth, we want to withdraw the facilities. A true analysis of the situation should be the first step to deal with it.

My Experience and Challenges

In that organization, I was the Chief Technical Officer. Almost all the departments were reporting to me. What was my problem? It was the same:

Canteen

Expenses for the canteen were going out of control. Workers were thankless. It was becoming very hard to organize the canteen. Every week, there was a heated discussion between workers and canteen management.

Transport

I was facing difficulties in getting the workers or staff to work even 15 minutes extra against paid overtime. Workers claimed the right to be dropped at their doorsteps. I wondered if discontinuing the facilities would solve my problems or just change their nature. For sure, it was going to change the problems.

Solution and Implementation

First, I addressed the transport issue. I called a few selected groups of workers and asked one question: Are you happy with the transport arrangement? Believe it or not, everyone had suggestions for value addition. I offered conveyance allowance instead of using company transport and left the option open. I did not declare that I intended to stop it. I explained to them that the total transportation cost for the whole staff was X amount for Y number of workers. So, their share could be paid to them in cash, and they could arrange their transport. From the next day, they started coming by bicycle because they saw that money as a saving. Within a month, this number reached the majority, and I was in a position to fix the problem.

Similarly, I addressed the canteen issue. Whenever we need to convince a group, we have to select the right people. We cannot execute our plan overnight. For management, money was not the big issue, but related problems were. The claim of workers was an issue. I explained it as a hardship. For shift workers, this is always a hardship.

Presently, I am working in Africa for a Singapore-based company. The company pays a hardship allowance to executives even for tough working conditions. In many companies, night allowance is paid because workers lose their health. It is a law of nature to rest at night. Night allowance is almost a hardship allowance. Whenever there is a deviation in life with nature, it is a hardship. I convinced my management of this.

So, every problem comes with its own solution; the need is there to identify it.

Though it has not been agreed to provide these services in the appointment letter or any settlements, it must be noted that many high courts and supreme court rulings have been given in such cases against the withdrawal of such facilities. You may refer to any labor law consultant or websites on the caption withdrawal of customary practices or facilities. Even the totally good gesture acts like the award of gifts during the Diwali festival, when withdrawn, have been questioned in the court.

While this is a legal side, there are also organizations where these have been in practice for more than half a century, and these are running smoothly with an exception here and there. The reason being, these have been managed fully through employee participation in the management of canteen and transport facilities, or these have been run by employee cooperative societies.

Hence, more than treating the welfare measures as a gesture, they need to be considered as an effective investment in employees. Discontinuation of these facilities will definitely vitiate the atmosphere and create ill feelings.

Kind regards,
Dayanand L Guddin