Tata Motors’ VRS may not interest workers at Pune plant

By: |
December 15, 2020 4:10 AM

As part of its cost restructuring exercise, the company came up with the scheme on December 11 for its permanent employees and workers. The scheme will remain open till January 9, 2021.

According to a member of the Tata Motors Employee Union, the official internal union at the plant, the impending wage agreement could be one reason for workers not opting for the VRS.

Tata Motors’ recently floated voluntary retirement scheme (VRS) for workers at its passenger and commercial vehicle plants in Pune may not find enough takers, union leaders have said.

As part of its cost restructuring exercise, the company came up with the scheme on December 11 for its permanent employees and workers. The scheme will remain open till January 9, 2021.

According to a member of the Tata Motors Employee Union, the official internal union at the plant, the impending wage agreement could be one reason for workers not opting for the VRS.

Dilip Pawar, president of the Shramik Ekta Mahasangh, an umbrella body for labour unions in the Pune region, said prevailing economic conditions could also be a reason. “Workers are not going to give up their jobs easily given the uncertainty, job losses and wage cuts. All the VRS in the recent past have not received a good response from workers,” Pawar said.

Tata Motors has separate unions at its plants in Pune, Sanand, Lucknow, Dharwad, Pantnagar and Jamshedpur. The company has been signing long-term wage settlement (LTS) agreements with the workers at these plants.

The Pune plant, has around 6,000 workers, of whom about 60% work in the passenger vehicle plant and around 40% in the commercial vehicle plant. Tata Motors had signed an LTS agreement with the Pune employees union in February 2019, which ends in September 2021. Negotiations for the new agreement will start soon.

The last agreement, saw workmen get a wage rise of `9,000 per month in the fixed component and opportunity to earn incentives up to Rs 6,000 based on productivity, quality and safety. This had taken wages in the company up to Rs 70,000 to Rs 90,000.

Tata Motors said it was implementing its turnaround plans effectively and was hence reviewing its fixed cost structures while ensuring employee welfare and well-being. “As a first step and in response to employee requests, a rewarding voluntary retirement scheme for employees and workers which creates a mutually beneficial proposition … has been announced … The compensation and benefits being offered under the VRS are amongst the best in industry and include health insurance as well as guidance on financial and retirement planning,” the company said.

According to union sources, the VRS offers 80% of basic pay plus dearness allowance (DA) to those in the age group of 40 to 45 years, till they turn 60. Those in the 45 to 50 age group will get 90% of basic plus DA, while those in the 50 to 55 age group will get 100% of basic plus DA. For all in the 55 to 60 age group, the company has offered 110% of basic plus DA.

Around 2,000 people are likely to be eligible for the scheme.

Union sources said the company has increased the offer for those above 50 years by 10% compared to the previous round of voluntary retirements. But this would only attract those closer to retirement and those with health or fitness issues.

Earlier this year, Bharat Forge had offered a VRS to workers at its plants at Mundhwa in Pune and Satara between July and September 2020, but only 20 workers opted for it, which cost the company Rs 2.91 crore. Bharat Forge floated a second VRS in November 2020 for workers with 10 or more years of experience.

Environment and energy company Thermax, too, announced a VRS for all employees at its plant in Chinchwad over 40 years of age or those who have completed 10 years at the plant. While 200 of the 285 workers were eligible for the scheme, around 47 opted for it, costing the company Rs 9.13 crore.

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