Ford, union finally strike severance package deal | The Financial Express

Ford, union finally strike severance package deal

As per the deal, each employee will get 140 days’ salary for every year for their completed tenure. Additionally, a sum of Rs 1, 50,000 will be given to every employee as a special settlement amount.

Ford, union finally strike severance package deal

After long-stretched negotiations, the management of Ford and employees’ union finally arrived at a settlement deal on the severance package for the workers of Chennai plant, which is being shut down as part of the US car major’s India manufacturing exit plan.

As per the deal, each employee will get 140 days’ salary for every year for their completed tenure. Additionally, a sum of Rs 1, 50,000 will be given to every employee as a special settlement amount.

During the process, the present status will continue till the month end while the management has agreed to pay full salary for September. Ford had, in its final severance package on September 5, offered to pay 130 days’ salary, which was resented by the union, and tripartite talks were held involving the state labour department to break the logjam.

Sources in the state’s labour department told FE that both the management and union representative have been asked by the department to sign a detailed agreement before September 30, 2022.

When contacted, a Ford India spokesperson told FE: “Since the announcement of business restructuring last September 2021, Ford has continuously made efforts to negotiate a fair and reasonable severance package and is happy to arrive at a settlement with the union.”

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The cumulative severance for each employee will range from a minimum amount of Rs 34.5 lakh and a maximum cap of Rs 86.5 lakh, translating to an average of Rs 44.8 lakh per employee. The revised settlement will translate to an average of about 5.1 years/62-month of salary for each employee (from a minimum of 3.9 years, that is 47 months to a maximum of 8.7 years, that is 105 months), he said.

The formal settlement agreement is planned to be executed before the end of this month ( September 2022). The company will notify employees of the next steps and looks forward to completing the exit formalities by September 30, 2022. “The company will continue paying wages to all employees until September 30, 2022 to support the exit formalities and remains grateful to the union as well as Tamil Nadu government and labour officials for their support,” he said.

Ford India had previously in July first week increased the equivalent average days in its severance package offer from the earlier 115 days to 121 days for employees who are supporting production at that time at the Chennai plant, in a bid to ensure timely settlement for all employees by July 31. Though more than half of the 2,700-odd workers agreed to opt, the remaining employees were reluctant and had asked for better package to the tune of an average of 215 equivalent days.

Since the announcement of business restructuring last September, Ford has continuously made efforts to negotiate a fair and reasonable severance package with the workers’ union, spanning 68 meetings, including meetings with labour authorities and senior government officials.

Ford had rolled out the last vehicle from the export commitments of the final assembly at the factory on July 20, inching towards closure of its manufacturing operations In India by July 31.

Ford’s other Indian plant in Sanand was taken over by Tatas, which had triggered unrest among the Chennai plant workers as they had been demanding job guarantee in the event of acquisition by a third party, rather than severance package. However, Ford was not able to find a buyer for the Chennai plant, and started negotiations on the package with the workers since June first week.

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