Nokia Offering Employee Buyouts In India

By R. Jai Krishna 

Finnish mobile-device maker Nokia Corp. has started offering voluntary buyout packages to its employees at its factory in Chennai, India.

The factory, which currently has 6,600 full-time employees, faces an uncertain future as Indian authorities have blocked it from becoming a part of the sale of Nokia's handset business to Microsoft Corp.

The asset freeze stems from a complex and ongoing tax dispute between Nokia and Indian tax authorities. The dispute could leave Nokia with a tax liability amounting to billions of dollars.

Nokia and Microsoft announced earlier this week that they had received all the necessary regulatory approvals for closing the sale of Nokia's handsets business to Microsoft. The deal, which is worth EUR5.4 billion ($7.4 billion) and was originally announced in September 2013, is now expected to close by the end of this month.

A Nokia spokesperson declined to comment on what will happen to the Chennai factory when the deal between Nokia and Microsoft closes.

"We cannot speculate on future scenarios in that regard," he said.

Meanwhile, he confirmed that Nokia has started offering severance packages to employees who wish to leave Nokia's employ. The scheme is a part of regular reviews that Nokia conducts on its manufacturing strategy.

These reviews take into account "the predictability and stability of the regulatory environment in the countries where the company operates," Nokia said in a statement.

Labor unions for the employees at Chennai are opposing Nokia's move and have petitioned the local labor commissioner to resolve their concerns, said M. Saravanakumar, the president of the main employee union.

The sizes of typical buyout offers vary between 300,000 rupees ($5,000) and 500,000 rupees ($8,300) based on its potential taker's years of service at the factory, Mr. Saravanakumar said.

Nokia has said that all employees at Chennai are eligible for the offer which will start Tuesday of next week.

Write to Juhana Rossi at [e-mail] and R. Jai Krishna at [e-mail]

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