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Startups compensation packages skew severance pay packs

When Infosys board dished out a severance pay of 20 months for Rajiv Bansal, it caused a lot of heartburn in India Inc. as having upset industry standards.

Feb 18, 2017, 01.15 PM IST
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"Severence packages are now matching global standards in India and are now becoming an integral part of compensation packages," says R Suresh founder of RGF Executive Search.
MUMBAI: Startups and IT firms offering high severance packages to draw top-notch talent have skewed compensation trend in India in the last two years, top HR officials say.

When Infosys board dished out a severance pay of 20 months for Rajiv Bansal, it caused a lot of heartburn in India Inc. as having upset industry standards.

"Severence packages are now matching global standards in India and are now becoming an integral part of compensation packages," says R Suresh founder of RGF Executive Search.

These new startups are doling out brilliant severance packages, which has skewed the whole trend.

"Companies are agreeing to higher packages depending on kind of personal risk the employee is running for the company, and how much confidential information on strategy and intellectual property he or she knows. Packages for employees running higher risk of litigation and who have agreed to an embargo on joining rival companies is also high," said Sanchit Vir Gogia, CEO of Greyhound Research.

Severance packages for very senior employees in technology and startups sectors have started to match global standards.

Top HR officials say the minimum to maximum industry norm is 3 to 12 months. There are two aspects to severance pay, negotiated when signing the contract..it gets accrues if company terminates without cause. "But if terminated with cause owing to say integrity or felony then the compensation is zero," Suresh said.

Exit pay is offered when a person resigns voluntarily and the competition doesn't want him to join competition. HR experts say usually homegrown talent are never given such high exit compensation and they have little leeway to demand higher packages.

In India contracts are at will.. it can be terminated anytime while globally CEOs and the company have to live out the full contract.

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