Ford asks Union to conclude severance negotiations by August 10

As it prepares to exit from the country, Ford India on Wednesday told the Chennai Ford Employees Union (CFEU) at its Maraimalai Nagar plant to conclude the severance negotiations before August 10 failing which the company will be forced to launch its “last offer” as a Voluntary Separation Scheme (VSS) package for the employees.

In a letter to CFEU office-bearers, Ford India said vehicle manufacturing operations have ceased at the Chennai plant on July 20 and the last date of manufacturing operations for FCSD production has been extended to August 31 to support the completion of severance discussions.

In the letter, accessed by DH, Ford India said the company increased its offer from 87 to 124 days of average equivalent wages per completed years of service, subject to a minimum amount of Rs 30 lakhs and a maximum cap of Rs 80 lakhs during the months-long negotiation.

“This offer is significantly higher than the compensation prescribed under the Industrial Disputes Act. 1947 and any market benchmarks. Additionally, the company has already offered to continue the current medical insurance coverage till March 2024 as per the current policy terms and conditions,” the letter said.

However, at the last meeting on July 22, the CFEU demanded 185 days of average equivalent wages per completed years of service calculated on the basis of 26 days per month apprenticeship period to be included in the service year. The CFEU also wanted the minimum package per employee to be at Rs 50 lakhs, and removal of the maximum cap of Rs 80 lakhs.

The company said the union’s demand is in the range of 214 to 295 days of equivalent wages per completed years of service which “is not significantly different from the earlier unreasonable demand of the Union, which was equivalent to 295 days of wages per completed years of service.”

P Senthil Kumar, General Secretary, CFEU, told DH that the union has decided not to accept the final offer of the company. “We will move the Labour Commissioner and take up our case. We are not happy with the package that is being offered by the company,” Kumar said.

Ford asked the union to come forward to discuss the terms of the settlement to be finalized before August 10, contending that this will be in the “best interest of all employees and their family members.”

“If the Union does not come forward to finalize the terms, the Company will be forced to launch its last offer as a VSS package for the employees. Further, the Company will no longer engage in any further bilateral discussions and will take appropriate legal procedures as next steps,” the letter added.

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.

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.

Though the production has ended, the company had last week said it will provide salaries till August 31 to “provide additional time to support the completion of severance discussions with the Union.”