Ford management, workers’ union reach settlement on severance package

The package ranges from ₹34.5 lakh to ₹86.5 lakh per employee. Management to pay wages to all employees till September 30

After months of discussions, Ford management and the union members have finally reached a settlement on the severance package being offered to its employees at the Chennai plant. As per the final agreement, the company will revise the final severance settlement to an average equivalent of 140 days of gross wages per completed year of service from the ongoing offer of 130 days.

An additional one-time payment of ₹1.5 lakh will be included in the final settlement. The cumulative severance package for each employee will range from a minimum of ₹34.5 lakh to a maximum of ₹86.5 lakh (translating to an average of ₹44.8 lakh per employee). According to details provided by Ford, the revised settlement will translate to an average of about 62 months salary for each employee (from a minimum of 3.9 years to a maximum of 8.7 years).

The formal settlement agreement will be executed before the end of this month. Ford will notify employees of the next steps and complete the exit formalities by September 30. The company will pay wages to all employees until September 30.

Two union members confirmed to The Hindu that they arrived at a final settlement. “Yes, the union has agreed to the final settlement offer that the company had doled out,” said one of them.

Since the announcement of business restructuring last September 2021, employees at the Ford Chennai plant have been asking for a fair severance package. And since May, the employees started a protest outside the plant in Chennai which went on for weeks. The Chennai plant has around 2,600 employees.

Last year, on September 9, the U.S.-headquartered carmaker said it would cease manufacture of vehicles for sale in India immediately; manufacturing of vehicles for export would wind down at the Sanand vehicle assembly plant by the fourth quarter of 2021 and the Chennai engine and vehicle assembly plants by the second quarter of 2022.

Ford completed parts production on August 31, 2022. Before this, it completed the vehicle manufacturing for exports by July 31, 2022, and the engine plant-related commitments by March 31, 2022. The Ford Chennai plant has manufactured products like Escort, Ikon, Figo, Fiesta, EcoSport and Endeavour.