Compensation and Benefit- Navistar International

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Added on 2019-09-16

Compensation and Benefit- Navistar International

Added on 2019-09-16

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HUMAN RESOURCEMANAGEMENTCompensation and Benefit

Compensation and Benefit- Navistar International_1

1Table of ContentsIssue............................................................................................................................................................2Recommendation.........................................................................................................................................3Rationale.....................................................................................................................................................3References...................................................................................................................................................5

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2Issue Navistar international had been giving health care benefits to its retired employees for years. Thecompany had also announced that all of its active employees would become eligible for health care benefits and insurance benefits soon when they retire. The company had been providing freehealth care to all its retired employees without any deductibles, hospital co-payments or required contributions to the amount of insurance premiums. But later in 1980's, it started facing a serious financial crisis due to which it was facing problems of escalating health care costs. Due to the current financial crisis, it decided upon reducing its health care liabilities. Due to the bankruptcy problems face by the company, even the other older companies in the industry were getting affected as they were also having a large number of retirees and they had also made promises to them for post-retirement health care coverage in the union contract. Due to such problems, the Navistar in the year 1992, had approached the Union Auto Workers which was the principal union and told that it was facing issues with regards to thecost of health care of retired employees and there was a threat of company's insolvency. But the problem got even worse when the Navistar finally filed a suit in Federal District court in order to seek a declaratory judgment as to the fact that it was entitled to modify or terminate its retirement health care benefits unilaterally. The company explained in the court that its reason for seeking such a declaration was mainly related to the efficiency and while seeking the judgment the company had classified the retirees as an entire class to whom the judgment shall apply. UAW got angry with such a step of the company and had filed a countersuit against the company claiming that Navistar had no legal right to unilaterally modify the terms of the retirement benefits as UAW was the principal union. In addition to this, there were various

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Compensation and Benefit- Navistar International