A union in India has sued General Motors’ local unit and its global CEO for failing to pay court-ordered compensation to sacked factory workers.
Background
The development adds to the U.S. automaker’s struggles to exit the country years after it shuttered local operations.
The company stopped selling cars in India in 2017 after years of low sales, however its exit from India has been beleaguered with legal tussles with workers after failure to find a buyer for a plant in Maharashtra, this after talks with China’s Great Wall Motor collapsed last year.
GM and the factory workers allege that they have been illegally terminated after the company decided to leave.
Why is this happening?
The tussle has been ongoing since 2021.
The latest filing signals an escalation in the dispute as workers accuse GM’s India unit and its executives, including CEO Mary Barra, of failing to follow court orders.
The General Motors Employees Union of 1,086 factory workers said in a filing to the High Court of Bombay dated Jan 16 that GM failed to pay them compensatory wages of 50% of their monthly salary starting April last year.
This was ordered by a local industrial court while it continues to hear the dispute.
GM’s fault
A union leader said that GM so far owes the workers around 250 million rupees ($3 million) in wages, based on the industrial court’s order.
A GM spokesperson said the company remains “very confident” of its legal position and that “GM is continuing to explore options for the sale of the (plant) site.”
In its earlier court filings, it has said the industrial court acted beyond its power in ordering the compensation.
The company has previously said it has tried to make peace and offered workers a generous severance package.
Counterpoint
Meanwhile the union disagreed, saying that the company continues to “blatantly violate” the industrial court’s order by not paying the workers a single cent.
It urged the court to hold the company and its executives in contempt, and punish them with imprisonment.
“The workers are unable to feed their families, pay for medical expenses, pay for their children’s education,” the union said in the filing, something that has not previously been reported.
The lawsuit is likely to be heard in the coming days.
Why the government refused
The state government rejected applications by GM to close the plant – a move that the company has previously said sends a “concerning message” to potential future investors.
Context here is that Western carmakers, especially U.S. companies, have struggled to break the dominance of Japan’s Suzuki Motor and South Korea’s Hyundai Motor.
Both collectively command a market share of about 60%.
Ford Motor quit operations in India in 2021.
GM ceased all operations in Maharashtra, but it has not received permission.
The state government rejected applications by GM to close the plant since it perceived the company’s move to be a “concerning message” to potential future investors.
