Tesla will be cutting the pay of all its salaried employees from April 13 in order to manage costs, according to an internal email that made its way to the media on Tuesday. For employees in the US, senior management at the rank of vice-president and above will take a 30 percent cut, those ranked director will take a 20 percent cut, and all other employees will take a 10 percent cut. Employees in other parts of the world will see similar reductions, subject to local law. All pay adjustments will be put on hold. The reductions will stay in place until the end of the second quarter of 2020.
Furthermore, the company is planning to put employees who work in non-critical functions but cannot work from home on furlough. These employees are mainly hourly workers at Tesla’s manufacturing facilities. They will remain employed, meaning that they still receive healthcare benefits, but they will not receive any pay. Under US law, this will qualify them for state unemployment benefits.
In Tuesday’s email, Tesla head of HR Valerie Workman called the move a “shared sacrifice” and said that the company’s priority is to ensure the safety of its employees.
Tesla, which employs 50,000 people worldwide, stopped the US production lines for its signature electric car in March to comply with government measures to stop community spread of COVID-19. It subsequently shut down its solar panel factory in the US and reduced capacity at a third manufacturing facility by 75 percent. All the employees at these facilities were initially put on paid leave, but with the announcement of the furloughs, that has changed.
The factories are scheduled to reopen on May 4, at which time the furloughed employees will be able to return to work. However, the company has also called a halt to all contract work until further notice, affecting hundreds of temporary staff whose jobs may not return in the foreseeable future.