Ford India has made the ‘final’ settlement offer to the workers of its Chennai plant, offering a deadline of September 23, 2022 to accept it. The American carmaker, who announced its plan to stop manufacturing vehicles in India last year, has continuously been in failed negotiations with the Chennai Ford Employees Union (CFEU) regarding the severance package for the factory employees. Now, Ford has presented its final severance package to the Chennai car factory Union and the company has said that it will be valid from September 5, 2022, to September 23, 2022.
In its official statement, Ford India said, “The Company has always cared for its employees and has taken steps to help them to the extent possible. Unfortunately, the Company’s attempts to negotiate a fair severance package have not yielded results because of the Union’s unreasonable demands (of an average of 215 equivalent days of wages per completed year of service). Union also failed to recognize that no company which has decided to stop production because of significant accumulated losses and no sustainable path forward can meet such demands.”
Alternatively, Ford has been trying to find a suitable buyer for the plant, however, as that hasn’t happened yet, the carmaker has decided to roll out the final severance settlement offer to employees. Ford India says that on average, the settlement is equivalent to 130 days of gross wages per completed year of service. The severance packages will range from a minimum amount of Rs. 33 lakh to a maximum cap of Rs. 85 lakh, which is a cumulative average severance of Rs. 41 lakh per employee.
Ford says, “The final severance settlement offer translates to an average of about 4.6 years or 56-month salary for each employee (from a minimum of 3.5 years i.e., 43 months to a maximum of 8 years i.e., 100 months), thus assuring employees with adequate financial cushion and adequate time to decide their next action. The Company strongly encourages employees to accept and sign-up for the final severance settlement offer, valid from September 5, 2022, to September 23, 2022, for their own and their family’s future. Further, employees who take the final severance settlement offer will be paid wages until September 30, 2022.”
Post the deadline, Ford says that if the Company were to retrench employees and pay the statutory compensation, the employees will only be entitled to severance pay of 15 days of every completed year of service.
Earlier in August 2022, Ford India signed a Unit Transfer Agreement (UTA) with Tata Passenger Electric Mobility Limited (TPEML) for the acquisition of the former’s manufacturing plant in Sanand, Gujarat. The agreement includes entire land and buildings, the vehicle manufacturing facility as well as the machinery and equipment inside. It also includes the transfer of all eligible employees of Ford India working at the Sanand plant to Tata Motors. The Indian auto giant acquired the facility from Ford for a sum of Rs. 725.7 crore exclusive of taxes, the company said in a statement. Both companies signed a tripartite MoU on May 30, 2022.