Axed Zilingo workers upset by how layoffs were handled

Singapore

SINGAPORE workers laid off from Temasek-backed fashion commerce startup Zilingo were told the news via a Zoom teleconferencing call and asked to sign a termination agreement the same day - failing which they would risk having their compensation cut, sources told The Business Times (BT).

The affected employees were said to have been put on 45 days of gardening leave as compensation regardless of tenure; those who declined to sign the termination agreement were told that their time of paid absence from work would be cut down to 30 days.

The norm among employers is to pay a retrenchment benefit of between two weeks' and a month's salary for each year of service. This depends, however, on the company's financial position and varies by industry, going by Singapore's tripartite advisory.

The advisory also guides that employees with two years' service or more should be eligible for retrenchment benefits; those with less than two years' service could be given an ex-gratia payment.

It is unclear whether the Singapore-headquartered startup belongs to a union. Sources said the majority of the 35 employees laid off are Singaporeans.

A NEWSLETTER FOR YOU

Monday, 3.30 pm

Garage

The hottest news on all things startup and tech to kickstart your week.

Sign Up

Aspiring unicorn Zilingo, which was valued at US$970 million in February 2019 in a Bloomberg report, had not responded to queries from BT by late on Monday.

Beyond the compensation offered, axed workers told BT that the layoffs were handled poorly and that the process felt "cold, unprofessional and very rushed". Affected employees were apparently told late on Thursday to attend a one-on-one "catch up" the next day, which was when they were told that they would be made redundant following a change in the company's direction.

An external legal consultant was present during the proceedings.

Axed staff said they were taken aback, given that Zilingo had made quite a number of hires this year, and given no signs of an impending slowdown or changes in the works.

Some employees expressed frustration that the startup did not offer to provide post-retrenchment support, and that their e-mail to the human resources department had gone unanswered.

Those who were laid off also baulked that the management chose to lay off staff just after the government's announcement that it would subsidise 75 per cent of the first S$4,600 of local employees' wages for April, to help businesses taking a hit from the virus outbreak.

News of the layoff was not internally communicated; some employees found out about it from BT on Saturday, sources said.

BT had reported that day that Zilingo had cut about a third of its 103 full-time employees in Singapore, accounting for the bulk of its global layoffs.

Zilingo had said that the total layoffs accounted for less than 5 per cent of its global headcount.

The company is said to have 796 full-time staff, though the total headcount is estimated to be about 900.

Sources said that the startup has also shut its US and Australian offices.

In a statement to BT last Friday, Zilingo's spokesperson said the business is focusing on its core business plans in Asia and emerging markets.

Earlier last year, Zilingo raised US$226 million in Series D funding, bringing the total amount it has raised to US$308 million - funds which enabled its expansion into the US, Australian and European markets.

Aside from Temasek Holdings, other key investors in that round included Sequoia Capital and Singapore investment fund EDBI.

Co-founders Ankiti Bose and Dhruv Kapoor set up the company in 2015 as an e-commerce platform in South-east Asia, and then expanded it upstream into the business-to-business space for sourcing, software, data and financing.

Despite the grievances aired by former staff, Adrian Choo, CEO of HR consultancy Career Agility International, told BT that Zilingo's supposed payouts are considered "fair".

With many startups being relatively young, compensating based on years of service would not amount to much, he pointed out.

"Startups hire in anticipation of business growth, and if it is not happening, they let people go because the burn rate is so high," he said.

The issue is likely not the compensation package, but the delivery of the message and whether it was compassionately done, he added.

The company could have offered outplacement support to mitigate the negative reactions to the news, Mr Choo pointed out.

"The market is bad now, but once it improves, it could see an exodus of their top guys leaving due to reputational damage."