Tesla is moving to cut staff pay and furlough hourly employees, placing them on leave due to the company’s economic situation in the face of COVID-19 lockdown. It is inescapable that many companies will suffer due to the COVID-19 outbreak, for now, it is Tesla’s turn.
CNBC reports that the car manufacturer, Tesla, is moving to slash what it will pay employees until the pandemic blows over. In addition to this, it will furlough its hourly workers until that time as well.
This move comes after health policies, made in the wake of COVID-19 raging outbreak, forced suspension of activity at Tesla’s California plant.
Tesla’s factory in Fremont, California is one of the world’s most advanced automotive plants, with 5.3 million square feet of manufacturing and office space on 370 acres of land. It employs about 10,000 persons.
With this decision, many of them would be adversely affected. Tesla, however, assures staff and investors that it would resume production by 4th May 2020. Until then, it sent a mail to explain how the salary cuts would be apportioned.
The company said it would embark on actions to help it get through the dire economic situations starting from 13th April 2020. It said:
“For U.S. employees, these reductions are 30% for Vice Presidents and above, 20% for Directors and above, and 10% for everyone else.
For non-U.S. employees, there will also be comparable reductions, of which the specifics will be communicated by the local leadership team in accordance with local laws and works-councils.”
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It further stated that they should expect these reductions to be in place until the end of Q2. Then to employees who cannot work at home and have not been assigned to critical work onsite; it said they will be furloughed.
Yet, they remain employees of the company and also retain their health benefits. But most importantly, until they are directed to resume work, they would not receive pay. It assures them that their unemployment benefits will be roughly equivalent to normal take-home pay.
This is sad news for Tesla which had started strong in 2020. It claimed that it delivered approximately 88,400 vehicles and produced 103,000 in Q1. It is yet to withdraw its statement that it had given to investors for 2020; Tesla had promised to surpass 500,000 vehicle deliveries in 2020.
Many employees are losing their jobs worldwide. In March, an unprecedented 3.3 million people filed for unemployment benefits in the US. And, it looks like this number will rise.
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