After reports of Cure.fit firing scores of trainers and other staff without prior notice, the fitness platform’s founders Mukesh Bansal and Ankir Nagori have written to their employees to explain their stand and to ‘set the record straight’.
Following the layoff, retrenched employees took to social media to express their dissent over the same.
In response to this, the company says that it has been "caught between doing our best to serve our customers during lockdown, trying to save as many jobs as possible while also ensuring long term viability of the business’."
Mukesh and Ankit have claimed that all employees were paid full salaries for March and April even though Cure.fit’s revenue went down to nearly zero from over Rs 70 crore a month. For the month of May, it claims to have paid all employees working full time.
“That is 3 months of massive burn totalling over $10M without any revenue whatsoever from customers… We made the commitment to teams that they will be paid for these 3 months no matter what, and we’ve stood by that while we processed the larger macro-economic condition,” they said in the letter.
Cost-cutting measures
In the light of the economic fallout of the COVID-19 pandemic, the founders said they are forgoing 100% of the salary for one year. All senior management is taking 50% cuts, while all central teams which are working more than full time will take 20-30% cut, starting June. However, there is no change in compensation for its operations staff like food delivery and doctors of Care.fit.
The pay cuts, they say, will save the company over Rs 8 crore a month. “We have also reduced our marketing significantly, saving the company another Rs 10 crores a month,” they added.
Speaking of trainers being laid off, Cure.fit claims that only 50 trainers have been engaged in live classes and keeping the remaining trainers (from a base of over 2500) on the bench without any revenue in sight is not a sustainable cost structure.
“We took a call to shut down our business in small towns that affect only 5% of our revenue but had a large cost base. We are letting go of these employees and excess staff in other cities which is less than 300 trainers,” the letter stated.
Apart from offering these employees nearly two months of additional salary, extended health insurance beyond the term of employment, among others, the company has said that it will rehire them when it ramps up hiring.
80% of its cost savings come from cost reduction among central staff, marketing costs reduction and only 20% from compensation changes for trainers.
“For the remaining 90% of our trainers, we are merely changing the compensation model so that we can sustain through this crisis. Our business model works on the basis of Trainers doing 120 classes/month. We will continue to pay them compensation for a minimum of 50 classes a month even if they do zero classes. Once the number of actual classes they do picks up through online PT or offline group classes, their compensation will go up automatically,” the letter stated.
Backlash over PM Cares fund
Clarifying over the backlash it received for its donation of Rs 5 crore to the PM Cares fund and ACT grants, it said that half of these funds are contributed by founders and management and the other half by the company. The letter added that the amount would not cover even 14 days of trainer salary and less than 5 days of the wage bill of the entire company.
And in response to the criticism it received from members as well as the laid-off trainers for paying celebrities to train its members, Cure.fit claims that its net monthly bill for celebrities is Rs 1 crore a month, which is barely 1 day of its entire wage bill and less than 3 days’ worth of salary for the training staff.