Honda Motorcycle confirms that it is pushing its older employees to retire early
Honda Motorcycle and ScootersIndia has introduced a voluntary retirement scheme for its employees above the age of 40 or who have completed 10 years in the company.
- In a written statement to Business Insider, the company said it has taken this strategic decision amid the prolonged demand slowdown in the industry following the COVID-19 pandemic.
- While it was not immediately clear how many employees this would apply to, the letter to its employee union states that the first 400 people who will apply for retirement would get an additional amount of ₹500,000.
“The VRS scheme announcement for our associates is a part of Honda’ overall production realignment strategy across all 4 factories to improve our operational efficiency with the objective of ensuring long term business sustainability,” the company said.
HMSI, the country’s second largest two-wheelers maker, has introduced a voluntary retirement scheme for its older employees to ‘maintain its existence’ in a highly competitive market.
AdvertisementIn an internal circular to its employee union, it states that employees above the age of 40 or who have completed 10 years in the company are eligible for the scheme.
According to reports, this is what the company’s compensation package for VRS employees will include:
- Three months’ gross salary multiplied by the total years of service.
- In addition, there will be one month (basic + variable dearness allowance) x remaining years of service, as well as an ex gratia of ₹22,000 x completed years of service.
- Other than that the company said there would be other additional benefits to associates who apply early for VRS. Such as for permanent workmen, it will be “either the existing Mediclaim coverage equal to AE (adverse event) Mediclaim policy and existing GPA (group personal accident) policy” till the retirement age of 58 years or, in lieu of that, a one-time amount of ₹300,000.
The company has over 7,000 employees across its four plants in India as of March 31.
Honda is realigning its operations
This implementation of its VRS scheme is a part of the company’s production realignment strategy. As part of the rejig of its manufacturing operations, in December 2020, the company stopped the production in the Greater Noida plant. However it said all the head office functions, R&D and warehouse for automobile, two-wheeler and power product business will continue to operate from Greater Noida.
However, as the largest contributor to Honda’s global motorcycle business, India continues to be a priority market for Honda. The company believes in the future market potential and has said that there are no changes to its ‘investment plans for future product and technology introduction.’
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