The insurance sector was opened up for private players in 1999. Thus LIC of India, which had a monopoly in the Life Insurance sector in India, lost its USP. It had to pull up its socks, when officers from its top-most cadres started leaving LIC in droves, for better prospects, as there were newer and better job opportunities available. This was a natural phenomenon, as talented employees thought that they could get better working conditions, more autonomy in functioning, better perks and salary on par with global standards; and most importantly, quicker chances of promotion.
Instead of conducting a study and researching into what led such people to quit the organization, and improving on the outcome of the research, in terms of the parameters mentioned above, LIC adopted a knee-jerk reaction and took the unfortunate and ill-advised decision to repudiate the resigning employees' arrears payments and even denied them the difference in Statutory retirement benefits such as Provident Fund and Gratuity.
This step was,according to the grapevine, a measure aimed at stemming the outgo of employees, proving as a deterrence for other employees considering such options and 'punishing' or penalizing the resigning employees. LIC should have known that disciplinary action could be taken against an employee only when he was in service and not after he had left it!
LIC was not able to retain such dynamic and talented employees, owing to its poor or non-existent HR practices. It didn't value its employees resulting into their exodus. Instead it resorted to inclusion of the Clause 3 1) B) which stated that resigning employees would not be granted their arrears' payments. Though this clause itself is illegal, LIC sought to save on its wage bill and peevishly deprive the resigning employees of their rightful dues, in spite of being on the rolls of the Corporation on the date from which the Charter was implemented retrospectively.
LIC has thus been repudiating arrears' payments since 1st August 1997, that is from the Charter implemented in the year 2000. It has been nearly 2 decades that this unjust and illegal practice has been actively pursued by LIC, yet the Government hasn't taken any steps to reprimand it. Instead, it actively supports the LIC management's decision by ratifying the Charter and publishing it in its Gazette.
The fact that LIC is depriving the Government exchequer of crores of rupees in lieu of Income-tax that would have been deducted from arrears' payments to the resigning employees, had they been paid, is lost on the Finance Ministry.
Anyway, it's never too late! The Finance Ministry could intervene and take LIC to task. The Government will be benefited as the taxes will enable it to boost its resources and implement more welfare measures for our countrymen. The arrears and other allied benefits must be paid with interest, as per current rates, to all the affected employees, immediately.
