FAW-Volkswagen’s Foshan Factory Cuts 565 Jobs with Annual Salary of 110,000 Yuan

Recently, in response to rumors about ‘Foshan Branch initiating personnel optimization,’ FAW-Volkswagen stated to the media:

This adjustment involves Foshan Branch not renewing contracts for some employees whose first labor contract has expired. The situation has been reported to relevant local government departments in advance.

FAW-Volkswagen has lawfully and properly provided full economic compensation to these employees in a timely manner. In addition to the normal payment of N times the economic compensation to these employees, special benefits, performance bonuses, and other additional compensations have also been provided. This adjustment will not affect the daily production and operation of Foshan Branch.

Previously circulated online, the ‘FAW-Volkswagen Foshan Company’s plan to reduce staff report’ shows:

The FAW-Volkswagen Foshan branch is located on Hongling Yilu in Guanyao, Shishan Town. There are about 3400 production employees who have all signed labor contracts and participate in social insurance and housing fund.

Currently, the company has two production lines (for gasoline cars and electric cars) with a planned vehicle production order quantity of 220,000 units by 2024. The gasoline car assembly line has around 1300 positions while the electric car assembly line has around 1460 positions. There are approximately 1800 production employees in the gasoline car assembly line and around 1700 production employees in the electric car assembly line.

Due to the oil vehicle production line changing from two shifts to one shift in August 2023, over 500 employees were reassigned to work at other companies under the group.

These employees will gradually return to Foshan Branch Company between April and May 2024, resulting in an excess of over 700 personnel at the Foshan Branch Company.

As it is difficult to find positions for the excess of over 700 personnel, FAW-Volkswagen plans to select 565 individuals with lower performance rankings among those who joined from July 2019 until their labor contracts expire in July 2024 (involving a total of 690 people). Those selected will be part of the bottom-ranking performers (the top-performing 25% will have their contracts renewed).

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Based on the expiration of the labor contract, we will not renew the labor contract with employees and provide economic compensation according to relevant laws.

There are 565 employees involved in non-renewal, with an average age of 26-29 years old. The majority have a college degree, with 73% from Guangdong Province. They are all male and participate in social insurance and housing fund full-time. The average monthly salary is about 6560 yuan, with additional benefits of 33,000 yuan per year, resulting in an annual income of around 110,000 yuan.

FAW-Volkswagen plans to issue a notice before May 25th, 2024 informing relevant employees that their labor contracts will not be renewed upon expiration and their employment relationship will be terminated. Currently FAW-Volkswagen has tentatively set two phased plans.

After the announcement, if employees have no objections from May 25 to 31, 2024 and are willing to cooperate in terminating their employment relationship, the company will provide N+1 months of economic compensation based on years of service.

If employees fail to reach an agreement with the company from May 25 to 31, 2024, starting from June 2024, the company will provide N months of economic compensation as required by law.

From the afternoon of May 25 to June 10, 2024, the company has decided to temporarily suspend production and cooperate in carrying out this work.

On May 13, 2024 FAW-Volkswagen held a meeting of the Company Party Committee for consultation on the above disposal plan. Since its operation began, FAW-Volkswagen has conducted large-scale layoffs for the first time. In order to safeguard social stability and prevent negative public opinion from arising, the company hopes that government departments can provide relevant support and guidance for this work.