The employees affected are those hired for non-technical roles and the move follows an order from the airline's Chairman and Managing Director Pradeep Singh Kharola.
The latest directive follows a similar order issued in August, which put on hold proposals for employing recently retired officials as well as renewing contracts for those former employees who were due for an extension.
Last year, the Union Cabinet gave its in-principle approval for disinvestment of Air India and constituted an inter-ministerial group for working on the strategy for the airline's stake sale.
"The CMD has directed that contract of the retired employees under non-technical category (i.e. excluding pilots, flight dispatchers, service engineers, OPT, OTT instructors, flight safety) be terminated with immediate effect," as per a circular issued by Executive Director-Personnel on January 5.
The directive, however, adds that exceptions could be made for officials performing critical roles on a case-by-case basis.
Air India spokesperson G P Rao confirmed the development.
Another source added that there were nearly 412 retired personnel working with the airline whose services have now been discontinued.
These employees also include those working with Air India's subsidiary companies such as Air India Air Transport Services Limited (AIATSL), Air India Charters Limited, Airline Allied Services Limited and Air India Engineering Services Limited.
The previous CMD, Rajiv Bansal, had ordered in August that "all proposals received for the post-retirement engagement of employees and renewals may be kept in abeyance till further orders.
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