Microsoft Quells Severance Firestorm, Lets Ex-Employees Keep Their Cash

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Attention East Coast Star Trek fans

On Saturday we published a letter sent out to some recently laid-off Microsoft employees explaining that they had been overpaid in severance – and that Microsoft wanted some of its money back. Something had clearly gone wrong during Microsoft’s first mass layoffs, as we began to receive more reports that ex-employees had gotten similar letters, and that some had actually been underpaid. One original tipster has detailed how he felt when he initially got the notice:

Right away I was angry because when I got my severance check, I immediately created a budget to stretch this out as long as possible. I know we’re in a recession now and I don’t know how long I’ll be unemployed. And now here comes this letter totally destroying the budget and on top of that, there’s no detailed information on how the error occurred, no details breaking down the severance pay.

Microsoft initially refused to provide any details on the incident, instead stating that it was a “private matter between the company and the affected people”. And then the news began to spread.

Since Saturday, well over 300 news outlets have covered the story. Many of them have deemed this to be a huge PR misstep, but it’s likely that Microsoft PR never even knew about the letter in the first place, and were only alerted to it after the fact. In any case, it’s clear that nobody ever considered how people would react if the letter leaked to the public.

Today Microsoft has announced that it will allow the former employees to keep any overcompensation they were sent (with overpayments averaging around $4,500), and that those who were under-compensated would be paid in full immediately:

Last week, 25 former Microsoft employees were informed that they were overpaid as a part of their severance payments from the company. This was a mistake on our part. We should have handled this situation in a more thoughtful manner. We are reaching out to those impacted to relay that we will not seek any payment from those individuals.

While there was some speculation that the issue could have been widespread (perhaps extending to many of the 1,400 employees laid off on January 22nd) only around forty five people in total (including 20 who were underpaid) were affected by the billing issue. Each of them is being personally contacted by Microsoft HR chief Lisa Brummel.

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