Ford finalises severance package to staff

The severance package is calculated from a minimum of 43 months (3.5 years) to a maximum of 100 months (8 years).
Representative Image
Representative Image

CHENNAI: Ford Motor Company on Monday announced its final severance package to its employees. It ranges from Rs 33 lakh to a maximum (capped) of Rs 85 lakh, thereby, averaging Rs 41 lakh per employee.

As per Ford, this translates to an average of 56 months or 4.6 years of severance pay for outgoing employees, thus, “assuring them with adequate financial cushion and adequate time to decide their next action”, the company said.

The severance package is calculated from a minimum of 43 months (3.5 years) to a maximum of 100 months (8 years).

This comes after the American multinational failed to find a buyer as it had ceased its manufacturing operations in India last year in September.

“In absence of any suitable alternative (buyer) for the Chennai manufacturing plant, the company has decided to roll out the final severance settlement offer to employees, which, on average is equivalent to 130 days of gross wages per completed year of service. 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 communicated to its staffers earlier on Monday.

Ford’s latest and arguably the last settlement package to its manufacturing employees is a step up from its earlier offer that considered an average of 115 days of equivalent wages, which was then revised to 121-day wages in July after furious employees staged protests.

Following its ongoing severance discussions with the Union and manufacturing employees in Chennai, the final severance settlement offer was communicated to employees on September 5, as per a release.

“Since the announcement of business restructuring last September, Ford has continuously made efforts to negotiate a fair and reasonable severance package with the Union, spanning 68 meetings, including meetings with labour authorities / senior government officials,” Ford India said in a statement.

“The company has always cared for its employees and has taken steps to help them to the extent possible. Unfortunately, the company’s attempts to negotiate a fair severance package have not yielded results because of the Union’s unreasonable demands (of an average of 215 equivalent days of wages per completed year of service). The Union also failed to recognise that no company which has decided to stop production on account of significant accumulated losses and no sustainable path forward can meet such demands,” it added.

Encouraging employees to accept and sign-up for its final severance settlement offer, valid from September 5 to September 23, it said such a move would be “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,” its statement read.

Ford India has also said after the September 23 deadline, if the company were to retrench employees and pay the statutory compensation, the employees will only be entitled to a severance pay of 15 days for each completed year of service, as per the statuary norms.

“The company continues to provide the employees with outplacement support as previously communicated,” it said.

Ford India had employed over 2,000 people at its 2 lakh-unit annual capacity plant in Maraimalai Nagar, on the city outskirts.

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