Almost a year after announcing its exit from the country, Ford India was yet to close operations at it Maraimalai Nagar plant, because the company and the Chennai Ford Employees Union (CFEU) could not come to an agreement on the severance package.
The company, which was to wind up operations in June 2022, extended the date first to July 31 and then to August 31. As the deadlock over settlement payment continues, the company enhanced the severance package again on Monday, and asked its employees to accept it before September 23.
The fresh offer, which on average is equivalent to 130 days of gross wages per completed year of service, as against the previous offer of 124 days.
“With a cumulative average severance of Rs 41 lakh per employee (from a minimum amount of Rs 33 lakh and a maximum cap of Rs 85 lakh), the final severance settlement offer translates to an average of about 56-month salary for each employee, thus assuring employees with adequate financial cushion and adequate time to decide their next action,” the company said in a statement.
The statement explained that the final severance settlement offer communicated by the company exceeds what the “applicable statutes call for and is higher than the industry benchmarks.”
Ford India also maintained that the CFEU’s demand for an average of 215 equivalent days of wages per completed year of service was “unreasonable”.
“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,” the statement added.
After the given deadline, if the company were to retrench employees and pay the statutory compensation, the employees will only be entitled to severance pay of 15 days per completed year of service, the statement said.
The company, in September 2021, had 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.
Though the production ended, the company will now provide salaries till September 30.
Ford was one of the first automobile giants to set up a factory in India after the country opened its economy in 1991. Besides the Maraimalai Nagar plant, Ford India has another massive manufacturing facility in Sanand in Gujarat, which was sold to Tata Motors. However, Ford India’s efforts to find a buyer for the Maraimalai Nagar plant haven’t materialised so far.
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