Slowdown impact: Ashok Leyland starts staff separation schemes to cut cost

The company had earlier said it was implementing cost-cutting measures to save around Rs 500 crore to mitigate the impact of slowdown in the market

Ashok Leyland has introduced Voluntary Retirement Scheme (VRS) and Employee Separation Scheme (ESS) for executive level employees as part of its plan to cut cost to mitigate the slowdown in the industry. Meanwhile, a section of its workers at the shopfloor of its Ennore factory have started protesting over the issuance of bonus.

According to the company's annual report, the total number of employees stood at 11,966 and total number of temporary, contractual and casual staff was 16,910.

The company management did not respond to Business Standard queries on the matter.

The schemes are applicable to all permanent executives of Ashok Leyland and come into effect from August 14 to August 31. Employees who have completed 40 years of age or a minimum of 10 years of service in the company are eligible to apply for the scheme, according to the notice.

The final VRS and ESS compensation payable will be below an overall ceiling between Rs 30 lakh to Rs 60 lakh for various categories. ESS is reserved for employees who aren't eligible for VRS, says a company communication to the employees.

The compensation would be about three months' fixed pay for employees who have completed two to five years in the company, one month's fixed pay for each completed year of service for employees who have between five and 10 years, and one-and-a-half month's fixed pay for each completed year of service for employees with service of 10-15 years. For employees with more than 15 years of experience, the compensation is two month's fixed pay for each completed year of service. 

Subject to minimum six months of service remaining, they will also get a three month notice pay on fixed pay, apart from terminal benefits including leave encashment, provident fund, gratuity and other benefits.

The final settlement of accounts will be made within two weeks from the close of the scheme, which is on August 31, 2019, subject to submission of documents. Loans which are recovered through payroll will be deducted from the amount payable. 

ALL management earlier said that it is implementing cost cutting measures which will save around Rs 500 crore even as the revenue is coming down due to slow down in the market. 

In November 2013, the company has announced VRS scheme to reduce manpower costs and align fixed costs to reduce activity levels, even as the company reported a net loss during the previous quarter. 

Meanwhile, a section of the workers at the company's facility at Ennore have started sit-in protest asking higher bonus for the year, said employee sources.

They said that the production has been impacted on Friday, due to this, and the company is expected to announce a non-working day on Saturday.

The bonus has been issued on a cap of Rs 1,000 crore net profit and last year, it has fetched Rs 1,34,000 per employee as bonus to the around 6,000 employees. This year, while the employees sought for 10 per cent of the net profit as bonus, the management is ready to provide only five per cent. For the last three years the bonus was announced based on a formula, finalising it in June and issuing it during Diwali, said the workers.

Sources said that the factory last year produced 30,000 vehicles, including Medium and Heavy Commercial Vehicles and ICVs, while the capacity is around 1 lakh units. This year, the production has also come down due to the slow down in the market. 

ALL has decided to declare August 17 and 19 as non-working day and sixthy day non working day respectively. Wages as applicable will be paid for the non-working day on AUgust 17 in the month of August 2019 payroll and recovery/ mode of recovery will be decided after discussion with the ALEU, said in the notice. The company said, for the non-working day of 6th day on August 19, employees will be paid sixth day compensation in the month of August 2019.