Microsoft has announced a new round of layoffs, cutting around 4,800 employees, which is about 2.1% of its global workforce, according to Microsoft. The company is offering a severance package to affected US employees.
Most laid-off US employees will receive at least 60 days of base pay, and they will remain on Microsoft’s payroll during this period, according to the severance documents reviewed by Business Insider. Some employees can receive up to 39 weeks of base pay as severance. The exact amount depends on their job level, seniority and how long they worked at Microsoft.
Microsoft severance pay
Employees at internal levels 64 and below will receive one week of base pay for every six months they worked at Microsoft. Employees at internal levels 65 to 67 will receive two weeks of base pay for every six months of service. Executives at level 68 and above will receive a different severance package.
Microsoft stock benefits
Microsoft is also allowing many affected employees to continue receiving stock benefits for some time. Employees at levels 67 and below will continue to receive regular stock vesting for either six months or 12 months, depending on how long they have worked at the company.
Also read: Why is Microsoft laying off 4,800 employees? Xbox restructuring explained
Health insurance support
The company will provide six months of paid health insurance coverage for affected US employees. After the paid health insurance ends, employees can choose to continue their health coverage for up to another 12 months through COBRA.
Business Insider said these benefits are similar to Microsoft’s Voluntary Retirement Program offered earlier this year, but the new layoff package provides shorter health insurance coverage than the retirement offer.
Microsoft is cutting jobs while also spending heavily on artificial intelligence (AI). The company plans to spend about $190 billion this year, mainly to build more AI infrastructure.
Layoffs and AI spending
Most of the layoffs are happening in Microsoft’s sales teams and Xbox gaming division, according to an email sent to employees by Microsoft Chief People Officer Amy Coleman. Amy Coleman wrote, “The cuts mostly impact the sales and Xbox gaming organizations.” Microsoft’s Xbox division also plans to cut 20% of its workforce by the end of June, according to the Business Insider report.
Microsoft’s maximum severance of 39 weeks is more generous than what some other big tech companies are offering. Salesforce offers laid-off employees a minimum of nine weeks and a maximum of 30 weeks of base pay. Oracle offers four weeks of base salary plus one extra week for every additional year worked, up to a maximum of 26 weeks, according to the reports. Meta offers laid-off US employees 16 weeks that is four months of base pay, plus two extra weeks for every year of continuous employment.
Overall, Microsoft is offering one of the larger severance packages in the tech industry, with some employees eligible for up to 39 weeks of pay, continued stock vesting, and extended health benefits.
