Offer withdrawal: Tata Motors pays damages to CEO-designate
MUMBAI: Tata Motors has compensated German national Marc Llistosella, whom it had hired to lead the company but withdrew the offer before he could take charge, it is learned.
On February 12, Tata Motors announced the appointment of Llistosella as its chief executive. But it said a month later that he will not be joining the Mumbai-based company. Tata Motors didn’t give any reason for the change in decision.
Llistosella, a former Daimler veteran, according to the employment terms, was to join the Tata Group flagship formally on June 1. He had also attended virtual meetings to gain an understanding of its domestic business in the intervening period.
While the damages paid by Tata Motors could not be ascertained, a labour lawyer said it is usually equivalent to the compensation an applicant would have earned during his contractual notice period. “Such issues are mostly amicably settled by the employer and the candidate,” he added. Tata Motors didn’t respond to TOI’s request for comment.
An official of a board and CEO executive search firm said that even if an applicant has not joined his new employer, once a job offer has been made and accepted, a binding contract exists between them. “And if the employer subsequently rescinds the offer, it could amount to a breach of contract. The applicant can seek compensation for the employer’s failure to withdraw the contract in accordance with its terms,” the official explained.
Employment contracts, especially those of C-suite expatriate hires, include a clause on liquidated damages. Had Llistosella withdrawn from the offer, Tata Motors could have claimed damages for breach of contract. The March 19 statement by Tata Motors didn’t mention whether it withdrew its offer or Llistosella backed out from the job.
Expatriate recruitments from many countries such as the UK and those in the EU are protected by the labour laws of their regions, with liquidated damages forming part of the contracts. India has no such protective labour laws. If Llistosella would have taken charge of Tata Motors, he would have become the fourth expatriate to helm the company.