Daimler has decided to reduce the hours of production by 20% instead of sacking 1,500 employees in its Brazilian truck making division.

Earlier, in the week of 24 August, the company had announced it would cut 1,500 jobs as the weak new vehicle demand in the country shows no sign of improving. However, the agreement that the company has signed with the local union guarantees jobs until August 2016.

In response to the announcement, the workers at the company's Sao Bernardo do Campo facility went on strike. The proposed job cuts would have affected around 13% of the company's Brazilian workforce, Bloomberg Business reported.

Wolfgang Bernhard, head of Daimler's commercial vehicle unit said: "The agreement shows that we can find fair solutions even in difficult times."

Daimler reported demand for its buses and trucks fell by 44% in Brazil in the first half of 2015.

The company had earlier reduced its workforce in Brazil by 3,000 jobs primarily through voluntary severance agreements during a two-year reorganisation. Two bus and truck manufacturing plants are operated by the company in Brazil. Daimler is building a new factory to produce passenger cars in 2016.