Govt Says Yes To Air India Employees’ Main Demands: Leaves, PF & Health Insurance


The government is looking to complete the sale by the end of the year.

The government has given in to Air India (AI) employees’ demands.

Govt To Bear Costs And Provide Support

It will bear the cost of liquidation loss on account of transfer to the Employees’ Provident Fund Organisation (EPFO) from company-owned trusts, inclusion of employees in the central government health scheme (CGHS), and encashment of leaves.

This step will be repeated for other public sector undertakings up for privatisation.

A government official involved in the process said that the ministerial panel on AI will also provide budgetary support before transfer of ownership if required.

The total outgo is projected to be around Rs 250 crore.

Avoiding Legal Battle

The issue has been building up for a while now.

If employees had taken the matter to the court, the sale process of the national airline would have been hindered.

The government is looking to complete the sale by the end of the year.

When And How Trouble Began

Air India has 16,077 employees, of which 9,617 are permanent and are entitled to gratuity and other benefits.

The government has put the entirety of the airline on sale including its low-cost international subsidiary Air India Express and 50 per cent in the ground-handling subsidiary Air India SATS.

The conflict over PF began when the airline management decided to transfer PF accounts to the EPFO before transferring ownership of the airline.

Tata Group Also Has Stake In Issue

Eight employee unions of the airliner have been pleading with the government to consider issues related to human resources, including provident fund (PF), medical, and other welfare benefits.

The Tatas, likely to acquire the carrier, were already in trouble with a lawsuit filed against them by Scottish energy company Cairn Plc.

The group is the frontrunner to take over the national carrier, which has accumulated losses of over Rs 70,000 crore till March 31, 2020.

Other Demands Agreed Upon

Another demand was for the medical benefits to continue which the government has now decided to accommodate.

The ministerial panel has directed the AI management to calculate the amount to be paid with regard to encashment of leave.

AI employees are entitled to an encashment of 300 days leave.

Employees Will Not Be Evicted

The panel has further allowed employees to stay in the residential colonies for six months after disinvestment. 

Multiple residential colonies are built for the staff – the largest of which is in New Delhi’s Vasant Vihar.

These properties are excluded from the sale and will be monetised to service debt of around Rs 30,000 crore.

What Comes Next

The disinvestment process is now in the third stage with bidders completing the due diligence process.

The Tatas had appointed Bain & Company and Seabury Group for the process.

The financial bidding will start by the second week of September.

The selected bids will go to a committee of secretaries for approval, then the ministerial panel.

An approval will also have to be sought from the Central Vigilance Commission if the government receives only a single bid.

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