Sacked GM workers in India sue company, CEO Barra for unpaid compensation

NEW DELHI, Jan 19 (Reuters) – 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, deepening the U.S. automaker’s struggles to exit the country years after it shuttered local operations.

GM (GM.N) stopped selling cars in India in 2017 after years of low sales but its complete exit from the market has been marred by complications including legal tussles with workers and failure to find a buyer for a plant in the western state of Maharashtra after talks with China’s Great Wall Motor (601633.SS)collapsed last year.

GM and the factory workers – who allege illegal termination after the company decided to exit – have been locked in legal battles 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.

In a filing to the High Court of Bombay dated Jan 16, the General Motors Employees Union of 1,086 factory workers states the company has failed to pay them compensatory wages of 50% of their monthly salary starting April last year, as ordered by a local industrial court while it continues to hear the dispute, the documents show.

A union leader told Reuters 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. Adding: “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 settle the issue amicably and has offered workers a generous severance package.

The union disagreed, and said GM continues to “blatantly violate” the industrial court’s order by not paying the workers a single cent. In its latest filing, the union 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, which has not previously been reported.

The lawsuit is likely to be heard in the coming days.

India has been a graveyard for some Western carmakers, especially U.S. companies, that have struggled to break the dominance of Japan’s Suzuki Motor (7269.T) and South Korea’s Hyundai Motor (005380.KS), which together hold a market share of about 60%. Like GM, Ford Motor (F.N)ceased operations in India in 2021.

GM stopped selling cars in India at the end of 2017 but one of its two factories continued to produce vehicles for export until December 2020. After that, GM ceased all operations and moved to close the plant in Maharashtra, but it has not received permission.

The state government has rejected applications by GM to close the plant – a move that the company has previously said sends a “concerning message” to potential future investors.

Additional reporting by Aditya Kalra; Editing by Simon Cameron-Moore