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Tata Motors will not give increment, deducts FY21 flexi pay

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Tata Motors will not give increment, deducts variable pay for FY21

India’s largest automaker Tata Motors has informed its employees that there will be no annual increment for the ongoing financial year (FY21) and will also deduct variable pay performance-linked incentive by 25% as part of a cost improvement program to reduce cost and CAPEX spends.

According to the ETAuto report, the announcement comes at a time when the company has a net automotive debt of INR 48,000 crore and plans to bring down the debt in the next three years.

In an email to ETAuto, the company stated, “Headwinds facing the automotive sector since FY20 have become severe with COVID-19. The resulting demand and supply shocks have necessitated optimizing our expenses and CAPEX spends. Tata Motors had called out a cash improvement program of INR 6,000 Cr during FY21 including a cost improvement program of INR 1,500 crore. One of the areas of cost optimization is people’s costs.” 

“However the company stated that there will be no reduction in the fixed pay of the employees”

As a part of the cost improvement program, Tata Motors has also taken various steps in terms of shelving contractual projects which were earlier devised to increase sales and service at the dealerships level.

Apart from this, the company has not renewed contracts of employees working under Long arm sales and service for its commercial vehicle business unit as the segment is deeply impacted by the COVID-19.

The auto giant is not renewing contracts of about 125 employees hired last year on the contractual payroll of Tata Motors under the program of Longarm sales and service (LASS).

On this, the company clarified that no contracts have been abruptly terminated or resources asked to leave the LASS project.

“As a way to serve dynamic enterprise necessities, we observe the business norm of hiring assets on contractual phrases immediately or via acceptable third-party service suppliers, when wanted. All such contracts by design are of a set tenure and for finishing particular duties. In this case, the contracts have been totally served by either side and neither of the contracted events is below any obligation to resume the association.” the company stated in an e-mail response.

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