As the government kick-starts the process of Air India's disinvestment by inviting
Expressions of Interest for a 76 per cent stake in the beleaguered airline, there is good news for its huge staff - the flag carrier alone boasts over 11,000 permanent employees.
To begin with, the Preliminary Information Memorandum released by the government clearly states that the "The Confirmed Selected Bidder shall abide by conditions set out in the RFP (Request for Proposal) or the definitive documents to safeguard employees' interests".
Then, earlier this week, came news reports that government would likely add a clause making it mandatory for the buyer to retain all employees for one year after the completion of the sale. "Employees cannot be asked to resign. While the private player will be given full independence in taking strategic decisions, employees will be asked to be retained for one year," an official told The Business Standard.
Also, the government is reportedly planning to implement an employee stock ownership plan (ESOP). "Permanent employees will be given stock option in the company, it will be given from the residual stake the government will hold in Air India," a senior government official told the daily, adding that employees opting for the plan will be able to monetise the stock when the airline is listed in the stock market. According to the report, the government has stipulated that Air India's buyer has to list the airline on the stock exchanges three years after assuming management control.
Given that the carrier is yet to shell out a whopping Rs 1,298 crore to its employees as salary dues - the arrears on revised salaries on account of the recommendations in Justice Dharmadhikari Commission Report 2012 are yet to be doled out completely over four years on - a stock-based compensation structure works well in its favour. After all, in the Preliminary Information Memorandum, Air India and its subsidiaries have committed to pay these arrears "before consummation of the Proposed Transaction".
To remind you, the government will retain a 24 per cent stake in the airline post privatisation. So if the ESOP idea goes through, its stake will reportedly narrow further to around 20 per cent. Also, with around 37.6 per cent of the permanent employees of Air India - and nearly 16 per cent of them at Air India Express Limited - expected to retire in the next five years, as pointed out in the Memorandum, the government is reportedly hoping that the new owner decides on a voluntary retirement scheme or VRS, with terms on par with their current service agreement. If the terms are attractive, the government expects a sizable number of takers.
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