Ford India Finalises Severance Package Terms With Chennai Plant Workers’ Union

Ford India has announced that that company has finally arrived at a settlement with the Chennai Ford Employees Union (CFEU) regarding the plant workers’ severance package. The American carmaker, who announced its plan to stop local vehicle manufacturing in September 2021, has been negotiating the settlement terms with the Union for a year now. After several failed negotiation attempts, the company presented its final severance offer to the Chennai car factory Union on September 5, 2022. The union has now accepted the severance package, and the formal settlement agreement is planned to be executed before the end of this month.

After several failed negotiations, the workers' union finally accepted Ford settlement offer presented on September 5.

In the official statement released by the company Ford India said, “Per the agreed settlement, 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 lump sum of Rs. 1.5 lakh will also be included in the final settlement. 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, which translates to an average of Rs. 44.8 lakh per employee.”

Some minor revisions seem to have been made to the offer that was given on September 5, 2022. Ford says that the revised settlement will translate to an average of about 5.1 years / 62 months of salary for each employee from a minimum of 3.9 years / 47 months, to a maximum of 8.7 years / 105 months.

In September 2021, Ford announced that it will stop making cars in India.

Alternatively, Ford wanted to find a buyer for the plant, who would take over the land facility and the employees, similar to the successful deal it struck with Tata Motors for its Sanand Plant, in Gujarat. However, the couldn’t find a suitable buyer for the facility and finally decided to roll out the final severance settlement offer to employees.

The company has said that it wants to complete the exit formalities by September 30, 2022 and will notify all employees regarding the next steps of the process. Under the settlement agreement, Ford will continue paying wages to all employees of the plant until the end of this month (September 30) to support the exit formalities. In its statement, Ford also added that, it will remain grateful to the Union as well as Tamil Nadu Government and Labour Officials for their support.