A software professional based in Delhi has triggered widespread discussion online after revealing that their startup wants employees to help absorb the financial fallout of a major business mistake.
The engineer claimed the company is seeking written approval from staff for a temporary salary reduction after a single employee's error allegedly resulted in losses worth ₹2 crore.
The matter came to light through a Reddit post in which the employee sought advice on whether to accept the proposal, negotiate for a stronger stake in the company, or begin looking for opportunities elsewhere.
"Company asking for a 20-30% pay cut for 2 months due to a ₹2 Crore loss caused by another employee. What should I do?" the individual posted.
Here's the link to the viral post
Startup proposes temporary salary cuts
Providing further details, the techie explained that a testing mistake made by a colleague reportedly damaged a significant order from a multinational client, leading to substantial losses for the startup.
"An employee made a critical testing error that ruined a major order for an MNC brand, costing our startup ₹2 Crore," the post stated.
According to the employee, management has proposed a cost-sharing arrangement to help recover the loss. Staff members have reportedly been asked to provide written consent for a 20-30 per cent reduction in pay for two months, while annual appraisals have also been put on hold.
"To cover the loss, management wants a cost-sharing split. They are asking employees for written consent for a 20-30% pay cut for the next 2 months, plus appraisals are on hold. In exchange, they are offering either ESOPs or a promise to repay the deducted amount later," the individual wrote.
'Is it normal or legally permissible?'
The employee, who said they lead a team of more than 20 people and have several years of industry experience, noted that personal finances were not the main concern. They claimed they had sufficient savings to manage the temporary reduction without difficulty.
Nevertheless, the proposal raised several concerns.
"Is it normal or legally permissible for a company to penalise an entire team for an individual's technical mistake?", "Since they desperately need me to maintain the core tech, should I demand a massive chunk of ESOPs if I agree to the cut?" and "Should I just refuse, let the chips fall where they may, and start interviewing elsewhere immediately?" the techie asked.
Reddit users divided over company's proposal
The post attracted a flurry of reactions, with many users questioning the fairness of spreading the financial burden across the workforce.
One commenter advised, "Say 'Sorry, I cannot afford this at this stage in my life.' No more explanations needed. Threaten to switch, if you need to."
Another user warned, "You shouldn't. If you permit it now, this will become a culture in the company."
A third argued that responsibility should rest with senior leadership rather than employees.
"This literally should come out of the founders' and upper management's paycheck, not the regular employees. If you have substantial stock options with the company, then it's understandable, but if not, then they're fleecing you for an issue out of your control," the commenter wrote.
Responding to the discussion, the original poster said the startup currently lacks external funding but has promised ESOPs once investment is secured.
"The company is currently unfunded, but management claims they will issue the ESOPs once they secure a funding round. According to our CTO, the company's current valuation is around ₹90 to ₹100 Crores, and they are aiming to raise that funding in 2027. I honestly don't know what to do," the employee replied.
Another Reddit user rejected the proposal outright, writing, "Simply deny. Why should anyone else pay for someone else's mistake? When they book a profit, do they pay an 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 bulls**t offer."
(This report is based on user-generated content from social media. Livemint has not independently verified the claims and does not endorse them.)