The Economic Times reported that after TinyOwl's founders decided to make 112 redundancies as part of a deal with VC firm Sequioa Capital, which had just agreed to provide it with $7.7m of funding, Choudhary and Goyal visited the company's Pune office to explain the job cuts in person.
That's when things started to go wrong: according to reports, employees annoyed at the second round of layoffs (it cut 200 jobs in August) "restrained" them, then held them hostage for two days, demanding two months' salary to make up for the layoffs.
TinyOwl said while it had already promised the workers two months of pay, the dispute was over when it would be released - while workers wanted it immediately, the company said one payment would be made immediately, with a second one cleared in four weeks.
In a statement on its website, the company said the job cuts were part of plans to "build TinyOwl as a sustainable, profitable and scalable business, working towards the ‘big dream’".
With the current take rate being 45 – 60, we are looking at a more commensurate operational structure. Every business goes through its own unique journey, with some hits and definitely some misses. We have had our share too. But the important aspect is to learn from your journey along the way and continue to do what is best for the brand. We thank all our employees for their contributions in making TinyOwl one of the fastest growing startup brands in the market today.
The situation was eventually resolved after employees let Choudhary go, with one telling the Economic Times: "Most of our contract papers have a clause of one month notice period. We have finally agreed to this as we are worried that if we prolong this, we won't even get a month's salary."
Co-founder Harshvardhan Mandad added: "We have had a long day yesterday in resolving a situation in Pune wherein two of our team members had been made to stay back in office for over 48 hours against their wishes.
"We have been able to resolve this and have immediately started working on considering the demands beyond the terms of employment, placed forward by employees from various cities."