A Delhi-based startup founder has found itself at the centre of an online storm after an employee revealed that staff members were asked to accept a temporary salary cut to help offset a Rs 2 crore loss caused by a colleague’s mistake.
Shared on Reddit, the startup suffered a setback when a team member allegedly made a critical testing mistake that affected a major order from a multinational client. The error reportedly led to financial damages amounting to Rs 2 crore, placing significant pressure on the company.
Rather than holding the individual employee solely responsible, management allegedly proposed a company-wide solution. The software engineer claimed that employees were asked to provide written consent for a salary reduction of 20-30% over the next two months to help absorb the loss. In addition, annual appraisals have reportedly been put on hold.
The company is said to have offered two possible incentives in return for the temporary pay cut. Employees could either receive Employee Stock Ownership Plans (ESOPs) or be repaid the deducted salary at a later date. However, the proposal has left several workers questioning whether such a move is fair or appropriate.
Sharing details about their own position within the organisation, the Reddit user said they had spent two years at the startup and had played a major role in building the company’s backend and technical architecture from the ground up.
The individual also claimed to lead a team of more than 20 developers and noted that they had sufficient savings to withstand the temporary reduction in income without facing financial hardship.
Despite being financially secure, the employee expressed concerns about the broader implications of the proposal. They questioned whether it was normal or legally permissible for an entire workforce to be penalised for a mistake committed by a single employee.
The engineer also wondered whether their importance to the company’s operations gave them leverage to negotiate a significantly larger ESOP allocation in exchange for agreeing to the salary cut.
The post further raised concerns about the startup’s future, with the employee asking whether the situation could be a warning sign of deeper financial troubles and whether it would be wiser to begin looking for opportunities elsewhere.
The post quickly attracted attention online, with Reddit users overwhelmingly criticising the company’s approach.
One user wrote, “This literally should come out of the founders and upper management paycheck not the regular employees. If you have substantial stock options with the company then it’s understandable, but if no ,then they’re fleecing you for a issue out of your control.”
Another commented, “If profits are not changing salary then losses shouldn’t change it either. Unless you want to be on “good terms” with the higher ups there is no need.”
A third user advised, “Say “Sorry, I cannot afford this at this stage in my life.” No more explanations needed. Threaten to switch, if you need to.”
Others warned against setting a precedent. One commenter said, “You shouldnt. If you oermit it now, this will become a culture in the company.”
Questioning the logic behind the proposal, another user wrote, “Why should anyone else pay for someone else’s mistake. When they book profit do the pay extra 20-30% of your salary as profit sharing? If no, then they have no right to share the loss, and no one should say yes to this bullshit offer.”
Several users also expressed scepticism about the company’s promise of ESOPs. One Redditor remarked, “Why do I think company is doing this in bad faith. The promise is not to cover this at all later stage through cash but an ESOP, which is pretty contingent on a funding a year from now. Who’s to say funding will come on time and as desired by the management. AVOID.”
Another advised the employee to prepare for an exit, writing, “Depending on your financial stability, get an exit out immediately. There is no way you can plan a long term future in here. Get an offer and dont give anything in writing.”
Sharing a personal experience, one user added, “Don’t do it. Can’t trust founders. I had ESOPs given in lieu of salary cut during covid. Then company sold my branch and I got nothing in the acquisition and had to give up my esops. Learnt not to trust founders the hard way.”