Ford signs aettlement agreement with employees of Chennai plant

The final settlement package translates to an average of 62-month of salary for each employee

Over a year after announcing that it will exit the Indian market, Ford India on Friday executed a Settlement Agreement with employees of its Maraimalai Nagar plant, concluding the negotiations on the severance settlement package.

The agreement was signed between Ford India and the Chennai Ford Employees Union (CFEU), representing 2,592 hourly permanent employees. The company also said it will pay an additional amount equivalent to one month of gross wages as a sign-on benefit for employees who complete the exit process by October 14, 2022.

“The severance settlement agreement, signed between Ford and the Chennai Union today, is an important milestone and a win-win for everyone involved. I thank the team at Ford as well as the Chennai Ford Employees Union for negotiating in good faith and arriving at a settlement outcome that keeps the best interest of employees at heart,” Balasundaram Radhakrishnan, Transformation Office, Ford India, said.

Read | Ford India revises final severance package to employees

The final settlement package (an average equivalent of 140 days of gross wages per completed year of service and additional Rs.1.5 lacs lump sum per employee) signed on Friday translates to an average of about 62-month of salary for each employee, the statement said.

The last date of employment for all employees was Friday and the company is notifying employees of the next steps and looks forward to completing the exit formalities.

The company, which was to wind up operations in June 2022, extended the date first to July 31, then to August 31, and finally to September 30.

The company had in September 2021 announced its plans to exit the India market after surmounting losses and fixed June 30, 2022 as the last date for production at Maraimalai Nagar. But the employees' protest in June forced the company to extend production by a month.

The talks between the employees union and Ford India was temporarily suspended after the company made public its plans to make electric vehicles for export markets from its India plants. However, the company went back on its plans and after which the talks resumed.

Ford was one of the first automobile giants to set up a factory in India after the country opened up its economy in 1991. Besides the Maraimalai Nagar plant, Ford India has another massive manufacturing facility in Sanand in Gujarat which has been sold to Tata Motors. However, Ford India’s efforts to find a buyer for the Maraimalai Nagar plant haven’t materialised so far.