Netizens rally against Lazada’s abrupt layoffs, demand fair resolutions for employees

Lazada, a Southeast Asia e-commerce entity has recently come under intense criticism for its abrupt layoffs that affected its workforce across six countries.

This move comes despite the company successfully securing a total of US$1.8 billion in funding throughout 2023.

The retrenched employees, when interviewed by Singapore state media CNA, expressed disappointment at being caught off guard by the sudden layoffs, discovering their redundancy upon returning to work after the holidays.

The non-compete clauses in employment contracts and restricted stock units (RSU) documents were highlighted as a source of unfairness, preventing them from joining certain companies listed as competitors.

Retrenched employees disclose six-figure RSU offerings tied to pay cuts upon joining

Violating the non-compete clause could result in the cancellation of vested shares held in trust by Lazada.

An illustrative case is that of Timothy, an employee who initially accepted a significant pay cut upon joining Lazada, enticed by a substantial six-figure sum in RSUs, which was worth more than his one-year’s salary.

After years of service, a portion of his promised shares had vested. Timothy, holding a managerial role, expected a larger bonus and more Lazada share options in April, only to face an abrupt layoff.

Like other retrenched Lazada employees, Timothy is still bound by the non-compete clause in his employment contract and RSU documents. The HR representatives labelled the layoffs as a “mutual separation,” a characterization he deemed “very nasty.”

The non-compete list includes Lazada’s main competitors such as Sea, Grab, TikTok, and Goto. However, it also encompasses retail firms like NTUC FairPrice, Giant, and Amazon, as well as logistics companies like J&T, SF, Kerry, and NinjaVan.

The consequence of violating the non-compete clause is the potential cancellation of vested shares, which are held in trust under the company.

When employees inquired about the possibility of Lazada buying back the shares, they were allegedly told to await the company’s initial public offering.

As Lazada is currently not profitable, employees with vested shares do not receive dividends.

Moreover, the value of the shares has significantly dropped since their initial issuance.

The lack of liquidity adds financial strain, particularly during tax season, as employees are still required to pay taxes on the RSUs.

Timothy emphasized the coercive aspect, stating that RSUs are held in a trust controlled by Lazada or Alibaba Group, and they use it to dissuade employees from joining competitors.

This lack of liquidity exacerbates financial challenges during tax season, and the diminished value of RSUs from their initial issuance compounds the issue.

Online community stands in solidarity with laid-off Lazada employees

When delving into the comments section on CNA, the online community unites in solidarity with Lazada employees who have been laid off, concurrently scrutinizing the company’s practices in the wake of the layoffs.

Many argue that the non-compete clause should be deemed invalid, questioning its enforceability during a retrenchment.

Some comments cast a critical eye on the perceived ineffectiveness of the union and stress the importance of achieving a fair and mutually beneficial resolution, particularly in the context of enforcing non-compete clauses during a retrenchment scenario.

A netizen highlighted a crucial perspective, contending that in cases of retrenchment, the non-compete clause should be rendered invalid, emphasizing that employees did not resign voluntarily to join a competitor for better prospects or higher pay.

He opined that it’s only reasonable to allow them to find a job in a capacity and in a field they’re experienced in without any form of penalty.

“If the union is not able to negotiate for this minimally, then the union is pretty useless. Hope the union remembers that everyone has a family to feed, have loans and bills to pay, please do what is necessary for them.”

Comments have also called on the union to actively support the retrenched employees in reaching a mutually beneficial resolution concerning clauses perceived as unjust.

Advocacy for fairness on the execution of non-compete clauses

Some individuals argue that Lazada is not explicitly preventing its former employees from joining a competitor.

Instead, the condition involves forfeiting their RSUs if they choose to do so within a year of concluding their employment with Lazada.

However, given the circumstances of retrenchment, it is contended that Lazada should have waived this rule.

Some comments acknowledged that non-compete clauses are legal but emphasized the importance of execution and fairness.

There were suggestions that such clauses may not hold water in courts unless the former employer can prove harm to their business.

MOM urged to bar Lazada from hiring for 3 years

A netizen urged MOM to enact a three-year hiring prohibition against Lazada as a penalty.

The plea underscores the need for timely compensation for employees facing abrupt layoffs, preventing scenarios where employers impede their transition to new opportunities.

Drawing from personal experience, the netizen shares a poignant account, “some will end up like me, because of a dispute over work injury matter lead to contract cessation.”

Despite recent changes in laws, he stresses the necessity to bolster labour protection, asserting that owed compensation should be promptly settled.

Recounting a four-year struggle to resolve a work injury claim dating back to 2018, he implores authorities not to prolong employee grievances.

Highlighting the importance of expeditious resolution, the netizen underscores that employees should be allowed to focus on securing new employment, given the competitive job market in Singapore.

He draws attention to the negative perception associated with extended periods of unemployment and questions whether MOM and NTUC wish to see a recurrence of the challenges he faced.

Impact of Lazada’s public image

Meanwhile, a netizen sheds light on an often overlooked aspect—the impact on retained employees.

The netizen pointedly observes that those remaining with the company are left to shoulder extra work, all while uncertain about when their turn for termination might arrive.

Simultaneously, there is a growing sentiment in the online community expressing apprehension about the broader repercussions on Lazada’s public image and trust.

Concerned comments speculate that the company may witness a decline in both clients and sales as a consequence of the controversy surrounding its layoff practices.