Photo: Jeff Kowalsky (Getty)
General Motors has just announced to employees that they will reduce their wages in order to offset the economic crisis that has resulted from the coronavirus pandemic. Here is what we know so far.
A tipster informed Jalopnik via email that GM had told its employees the details of a salary reduction plan on an internal site. While we don’t have much information yet, what we do know is that it seems that most employees who work from home will end up with a “20% referral payment”, while some employees who can’t work from home will have to only their wages reduced by 25 percent.
GM’s correspondence with his employees includes discussions about some 6,500 American employees who cannot work from home and who will therefore participate in something called the “Non-Pay Salary” policy described below:
Absence of Paid Downtime Employee (SDPA)
In the United States, we have about 6,500 salaried employees who are unable to work from home and therefore we will use our Downtime Wage Absence policy. In the United States, the majority of these employees are in wage manufacturing or in engineering roles. Other countries value the appropriate use of similar programs that comply with local laws.
In the United States, these employees will receive 75 percent of their pay while they are in SDPA.
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As for those not covered by the Downtime Payday Leave situation, there will be a 20 percent deferral of payments, with the cut being refunded in a lump sum at the end of the year or at the beginning from 2021. From GM:
Paid Salary and Payment Executive
In addition, starting April 1, most global employees not affected by the downtime plan are required to take a 20 percent deferral of payment, which will be refunded in a lump sum, with interest, between 4th quarter 2020 and no later. than the 1st quarter 2021.
Statements of compensation will be available. The process varies by country, and a recommendation may be required.
In addition, as part of this shared sacrifice, our executives will see a total reduction of 25 percent and 30 percent for the Senior Leadership team. Even our Board of Directors will take a size.
This comes at a time when GM and other manufacturers have shut down their plants to protect employee health and slow down the spread of coronavirus, and during a time of economic uncertainty. Just last week, we learned that Fiat Chrysler has released about 2,000 contract employees as a result of the pandemic.
Here is GM’s response to our statement request:
“GM’s business and balance sheet was very strong before the COVID-19 fire and the steps we are taking now help to ensure that we can regain our momentum as soon as possible after the crisis is over.”
Overview of GM Compensation Adjustments
- Worldwide, all GM employees have 20 percent of their pay compensation delayed as of April 1
- This deferral will be repaid in a lump sum no later than March 15, 2021.
- As part of this shared sacrifice, competitors will see a total reduction of 25 percent and 30 percent for the Senior Leadership team
- GM’s Board of Directors will take a 20 percent reduction in compensation
- The health benefits are not impacted.
- As of 2019CYE, GM had about 69,000 salaried employees (42 percent of the global workforce)
- The immediate cash savings will be significant, but we do not provide an interval
Absence of Paid Downtime Employee (SDPA)
- About 6,500 salaried employees in the United States participate in SPDA instead of the salaried deferral program. Other countries value the appropriate use of similar programs.
- These employees will receive 75 percent of their pay while they are in SDPA. This reduced salary is meant to be instead of unemployment compensation benefits.
- Most of the affected employees are in Manufacturing Health or Engineering role and are not able to work remotely.
Update March 26, 2020 4:52 P.M.: Jalopnik spoke with a GM spokesperson, who gave some background: “We will save cash during the crisis because we have so little production in the world,” he said. “But we also want to keep the team,” he continued, saying that doing so allows GM to get things back up to speed quickly when it’s all over.