GM India exit: Employees’ voluntary separation scheme closes this week
After announcing its India exit on 18 May, General Motors sent mails to employees the very next day about the voluntary separation scheme
New Delhi: General Motors (GM), which has decided to stop selling vehicles in the Indian market from the year-end, has given its employees in the country less than a month to opt for a voluntary separation scheme (VSS) as it starts winding down operations in the country.
After announcing its decision to stop retailing vehicles on 18 May, the company sent mails to employees the very next day about the VSS that will close on 15 June 2017.
General Motors India president and managing director Kaher Kazem had stated around 400 employees engaged in domestic sales and after-sales activities would be impacted.
According to the internal communication accessed by PTI, the company offered compensation of “45 days salary for every year of completed year of service or part thereof in excess of six months” in normal cases. On the other hand, for those who are nearing retirement, GM offered employees compensation of “monthly salary multiplied by the remaining months of service till normal age of retirement”. The minimum compensation payable eligible shall be three months salary, it added.
According to people familiar with the matter, nearly 250 people in marketing, sales, finance and administration are likely to be given golden handshakes by September itself.
Kazem had, however, stated at the time of announcing the company’s decision to exit from domestic operations that only half of 400 affected employees “are expected to move on by the end of 2017”. Employees in after sales department have, however, been issued letters for continuation of service till further notice, the sources added.
When contacted, a GM India spokesperson said: “GM understands this is a difficult decision that impacts a number of our hard working and professional employees, and we are providing counselling, financial advice and outplacement support, as well as a separation package in excess of the statutory requirements.”
In case of Halol plant, where the company has ceased production since April this year, GM India had come out with a fresh voluntary retirement scheme (VRS) last month for a short period citing request from workers. The company had reportedly increased VRS offer to workers at the plant to 100 days of salary per year of work from an earlier 40 days of every year of completed service.
Already, dealers of GM India are gearing up to drag the auto major to court while also exploring possibility of a class action suit in the US over inadequate compensation. A majority of 96 dealers, which operate around 140 showrooms across India, are unhappy with the company’s offer of just around 12% of total investments they have made as compensation. Moreover, they also said there would be job losses of around 9,500 due to closure of showrooms and service outlets.
In 2015, the company had announced to invest $1 billion (Rs6,400 crore) in India to enhance manufacturing operations and roll out 10 locally produced models in the country over the next five years. In January this year, the American firm put on hold its investments on new models for the country as it undertook a full review of its future product portfolio in India.
On 18 May, General Motors suddenly decided to stop selling its vehicles in India as there was no turnaround in its fortunes here after struggling for over two decades to make a mark.
The company will now focus on exporting vehicles from its manufacturing plant at Talegaon in Maharashtra after it stopped production at its first plant at Halol in Gujarat last month. GM India sells models like Beat, Sail and Cruze in India.