No Minimum Wage, No Maternity Leave: How NBFCs in Kerala are Exploiting Employees

The struggles of employees at Non-Banking Finance Companies (NBFCs) across the country are often underreported or even unheard.

“One of the most exploited categories of employees in Kerala is NBFC employees. The employees get very meagre salaries which are far less than stipulated minimum salaries. The employees here are denied other social security benefits and also, the working conditions are pathetic,” CC Ratheesh, general secretary of Non-Banking and Private Finance Employees Association (NPFEA), told NewsClick while speaking about the issues faced by the NBFC employees in the state.

Though there are around one lakh employees in the country engaged in different NBFCs, the working conditions and wages of the employees are pathetic. Since most of these employees are not unionised, they are subjected to immense exploitation.

There are 25 major NBFCs in Kerala. Of these, Muthoot Finance and Manappuram Finance are the leading NBFCs. Both Muthoot and Manappuram Finance have been witnessing large scale protests from its employees for past few months against the alleged anti-worker policies of the management.

Muthoot Finance

On August 20, 2019, the employees of Muthoot Finance had launched an indefinite strike demanding the management to recognise the Muthoot Finance Employees Union (MFEU) and formulate a salary structure, among other things. Though Muthoot is one of the largest and oldest NBFC in India, there is no fixed minimum wage applicable to its employees. There was not even a standing order for the functioning of the firm.

In between the strike, the management reportedly said that they would not allow a union affiliated to the Centre of Indian Trade Unions (CITU). The union MFEU was formed in 2016 in order to address the wage-related issues of the employees of Muthoot Finance. The MFEU is the part of NPFEA, which is affiliated to the CITU. The management, however, targeted the union members by transferring them from their home branches or suspending them. Then an indefinite strike was staged in which all the branches participated and it was withdrawn after 17 days when the management agreed to rescind the transfer orders.

The indefinite strike last year started on August 20 and continued till October 10 when the management finally agreed to the demands of a hike in salary of the employees and also recognise the formulation of the union.

Afterwards, on December 7, 2019, Muthoot management served termination letters to 164 employees. Along with this, the management also informed that the 43 branches would be closed down. The union said the terminations were illegal and unilateral. The union leaders and employees who had participated in the 52-day-long strike were among the terminated employees.

Thomas KJ of MFEU termed it a victimisation as the management had been targeting the employees who led the protests.

Following the termination of 164 employees, the union and employees had started an indefinite strike from January 2, 2020. In the wake of the COVID-19 pandemic, the union had called off the strike on March 26 following an order by the state’s labour department. Employees from 564 branches including the head office in Kochi had been taking part in the strike which was being organised under the banner of NPFEA. Muthoot has around 3,000 workers in Kerala. However, around 30,000 employees are working under Muthoot Finance across the country.

Eleven months after the termination of employees, the union and employees are now forced to restart their strike. As part of the upcoming protests, MFEU has now given the call for a strike between November 23 and 25.

Manappuram Finance

The story of employees at Manappuram Finance is no different. The Manappuram Finance Employees Union has given a call for relay strike from November 2. The main demands of the employees include reinstating of illegally terminated employees, canceling transfer orders and giving the government stipulated minimum wages, among others.

“In Manappuram, they don’t allow the employees to rejoin once they have gone on maternity leave. They say that after the maternity leave, you don’t have to come back. The management has a similar attitude in case of ESIC leaves as well,” said Ratheesh.

Muthoot and Manappuram are the leading NBFCs across the country whose head offices are in Kerala. Manappuram Finance, whose head office is at Valappad in Thrissur district, had a profit of Rs 1,300 crore during last year and Muthoot Finance whose head office is in Kochi had around Rs 3400 crore profit in the same period.

“Both are not ready to give minimum wages. They exploit employees and they don’t want the employees to stay with the organisation for a long period. It’s simply because if the employees stay for long, the management has to give benefits. Also, they fear that the employees would form unions and thus, the unions would demand better wages and working conditions. So, the management doesn’t want the employees to stay longer,” said Ratheesh.

“Though they are the leading NBFCs, they are not ready to give the minimum wages. While, smaller NBFCs like Max value, Intel money, KLM etc give minimum salary. But Muthoot and Manappuram managements know that even if the employees opt to go out, they would get new candidates because of the high rate of unemployment in the society,” Ratheesh added.

On the other hand, these NBFCs in the state have a common body named Kerala Non-Banking Finance Companies Welfare Association. Though NewsClick has sought the comments of the association on the struggle of employees in Muthoot and Manappuram, we are yet to receive a response.

Meanwhile, recently, the state Labour Department conducted a raid in all the offices of Muthoot Finance. The Labour officials had met as many as 1,358 employees from 354 offices. Of this, 463 employees have not been getting minimum wages.

“The existing labour laws in the country are not applicable to these NBFCs,” Ratheesh reminded in this context.

Though the Kerala High Court and state Labour Department had intervened in the case of Muthoot, the management was adamant. The management is reluctant to fix the minimum wage even after the intervention of Kerala government and the High Court. Once, the chairman of Muthoot Finance, in a press meet, stated that he would not abide by any law and he would not implement minimum wages even if the prime minister said so.

Raising the concerns of employees of NBFCs across the state, Rajya Sabha Member Elamaram Kareem had earlier urged the Centre to introduce a law governing the working conditions and salaries of the employees in NBFCs. Back then, Kareem said: “Since there is no specific order or law governing the working conditions or salaries of the employees, all these private entities have engaged employees with very less salary and without any specific hours or more than the minimum working hours. There is no minimum wages or social security and welfare scheme applicable to these poor workers employed in private NBFCs. Major portion of such employees are women and youths with good educational qualifications.”

Mentioning the example of Muthoot Finance, Kareem has added: “The condition in many other NBFCs is more or less the same. So, there is a need to introduce a central law to regulate the functioning of NBFCs and the working conditions or salaries of the employees in these firms. The working hours and minimum wages should be specified in the law so that the poor section of employees engaged with NBFCs would get their rights. I urge the government to introduce such a law.”