Microsoft Bungles Severance, Asks Laid Off Workers for Money Back

By Darryl K. Taft  |  Posted 2009-02-23 Print this article Print

In what appears to be a clear sign of the times, Microsoft is reportedly asking laid-off employees to return portions of their severance pay that the company apparently overpaid. Even the mighty amongst the tech world have been hit by the recession, as Microsoft and stalwart IBM face both layoffs and bad publicity around them.

In what appears to be a clear sign of the times, Microsoft is reportedly asking laid off employees to return portions of their severance pay that the company apparently overpaid.

TechCrunch has an item stating that Microsoft has contacted some of its former employees and is asking them to repay the software giant for overpayment on severance due to the company's own miscalculations. Indeed, the report said that not only has Microsoft apparently overpaid some of its former employees' severance, but the company also underpaid some of its recently laid off workers.

TechCrunch displays a copy of the letter Microsoft reportedly sent out to affected parties. The document reads: "This letter is to inform you that an inadvertent administrative error occurred that resulted in an overpayment in severance pay by Microsoft. We ask that you repay the overpayment and sincerely apologize for any inconvenience to you."

Microsoft last month announced plans to lay off up to 5,000 employees, including 1,400 the company let go on Jan. 22. If this issue of miscalculated severance pay is an indication of Microsoft's handling of its initial round of layoffs, then folks in future rounds have cause for concern. More cause, that is, than being laid off -- as asking an unemployed person to return payment is truly adding insult to injury.

Yet, it is not clear how many people were asked to pay money back to Microsoft. Though, according to TechCrunch, "it wasn't a single isolated incident..."

Microsoft later on Feb. 23 reversed its decision and told its former employees they did not have to repay the overpayments--which ranged from hundreds of dollars to $5,000 per employee.

The recession has taken its toll on even the mightiest of technology companies. Companies such as Microsoft and IBM -- bellwethers of the technology sector -- have taken hits and suffered embarrassing exposures such as this reported severance issue.

For its part, IBM has quietly laid off up to 5,000 employees since the beginning of the year. Big Blue also took heat earlier this month over word that the company had an initiative called Project Match, which offers laid off IBMers, among others, the opportunity to apply for jobs in emerging markets where IBM is hiring such as India and China. 

Editor's Note: This story was updated to include information about Microsoft reversing its decision to have severance overpayments returned to the company. 


Darryl K. Taft covers the development tools and developer-related issues beat from his office in Baltimore. He has more than 10 years of experience in the business and is always looking for the next scoop. Taft is a member of the Association for Computing Machinery (ACM) and was named 'one of the most active middleware reporters in the world' by The Middleware Co. He also has his own card in the 'Who's Who in Enterprise Java' deck.

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