Large number of QSRs in India faltering on employee welfare

A study by TeamLease Services Limited has revealed that over a fifth of the employers in India’s QSR sector do not even pay minimum wages and nearly a fourth don’t grant any leaves apart from weekly offs. TeamLease Services Limited, India’s leading staffing conglomerate engaged in revolutionising employment, employability, and ease of doing business, has highlighted the concerning state of non-compliance in India’s QSR sector.

In line with FSSAI’s compliance guidelines, Teamlease Services highlights the need for abiding by regulatory compliance for employee well-being. Besides the humanitarian conditions, there is an immediate attention required from many of India’s QSR industry players to address these issues as non compliance can lead to legal penalties, reputational damage, and operational disruptions for businesses operating in the QSR sector.

With India’s food sector undergoing explosive growth, the country’s Quick Service Restaurant (QSR) sector is projected to reach a milestone of 38.71 billion USD by 2029, accompanied by rapid national expansion in the coming years. However, growth doesn’t necessarily mean equity and development.

The study reveals many disturbing statistics. India’s QSR sector is experiencing high attrition rates with a monthly average of 10-40 percent employee turnover. Around 75 percent of the workforce in India’ QSR sector has a tenure of less than three years, with 36 percent serving for just one to two years. One of the reasons behind the high attrition rate is the subpar compensation levels and practices as well. The average salary of 88 percent of the workforce in India’s QSR sector varies between Rs. 15,000-20,000. It is even more concerning that 12 percent earns less than Rs 15,000, which is less than the minimum wage threshold for many states in India.

Additionally, around 64 percent of the QSR workforce in India does not receive any incentives. Alarmingly, 21 percent of QSRs are non-compliant in terms of statutory benefits as they fail to meet minimum wage requirements. Also, 30 percent of them neglect to provide statutory bonuses. In the absence of bonuses and incentives, employees may struggle to find the drive to perform at their best. It impacts overall operational efficiency and customer service quality.

It has also been revealed that 23 percent of QSRs in India are not compliant with the Employee's State Insurance Corporation (ESIC) provision that ensures medical care for employees earning less than Rs.21,000. This oversight compromises employee well-being and reflects a disregard for regulatory obligations.

In this regard, Kartik Narayan, CEO of Staffing, TeamLease Services Limited, said, “As a leading staffing partner, we have witnessed firsthand the impact of non-compliance on both the workforce and business operations. Nearly 75 percent of QSR employees have tenures less than 3 years, with over a third lasting just 1-2 years. This is further fueled by issues like subpar pay, lack of incentives, and failure to provide statutory benefits. These findings are indeed a wake-up call for the QSR industry.”

Gratuity benefits in the sector are also a matter of concern. While 58 percent of the QSR chains extend gratuity benefits to employees with five-year tenures, the proportion of eligible employees is significantly low due to high attrition rates. Moreover, 24 percent of the surveyed QSRs in India do not provide any leaves beyond standard weekly offs, potentially contributing to employee burnout and dissatisfaction.

Balasubramanian A, Vice President & Business Head of TeamLease Services Limited, asserted, “While the QSR industry is undergoing rapid growth, there is a need to uphold compliance standards. There are alarming gaps like failing to provide minimum wage and neglecting statutory bonuses. Also, nearly 24 percent of QSR businesses do not provide any leaves beyond standard weekly offs, 4 in a month. Only a few of them prioritise employee satisfaction by allowing leave carry-forwards and accommodating extended leaves for personal reasons. This oversight erodes employee morale, and undermines customer trust.”

“These practices largely explain why the average age of employees in the QSR space is in the low 20s. They see this as a first step but definitely not even as a near term let alone a long-term career option. By partnering with experienced staffing and compliance experts and leveraging advanced tools, QSRs can navigate this complex landscape while prioritising their workforce's well-being,” he further added.