‘You’re being laid off … and you owe us money’
March 4, 2009 by Sam NarisiPosted in: Budgets and spending, Communication, IT employment, In this week's e-newsletter, Latest News & Views
When faced with the unenviable task of laying off employees, it’s important for companies to do everything right. An unfortunate accounting error during a staff reduction recently caused a big embarrassment for one well-known company.
Microsoft recently made headlines after it laid off 1,400 workers. And then the news got even worse.
The software giant discovered that an “inadvertent administrative error” resulted in some former staffers being paid more severance than the company planned.
So what did the company do? It sent a letter to all those affected and asked them to pay the money back.
The costs of the error weren’t exactly insignificant — Microsoft’s HR chief Lisa Brummel estimated 25 former employees each received an average of $4,000 – $5,000 in extra cash.
But several critics jumped on the company for being insensitive and making a big PR mistake. And the company listened — last week, Brummel apologized and announced the former employees would now get to keep the oversize checks.
What do you think about this story? Should Microsoft be repaid the money? Or would it have been best to let it go and not draw any attention to the mistake?
Let us know your opinion in the comments section below.
Tags: accounting, layoffs, Microsoft, severance
March 10th, 2009 at 10:04 am
As for PR and saavings go it was a mistake to even bring it up. The public at large is very sensitive at this time to people who are losing their jobs and their plight.
However, I think there may be a larger issue here. I am not a HR professional so I am just theorizing but I wonder if the laws of the land leave companies in a position where they often cannot do the right thing. I wonder if somebody will now say that they were treated unfairly compared to the person next to them and the other 1375 people will want their extra $5000. Suddenly it isn’t such an easy decision. We live in a country where the legal environment where just trying to do the right thing may simply not be an option.
March 10th, 2009 at 10:12 am
Microsoft should not be paid back the money especially if a significant amount of time had passed before the “error’ was discovered. Even if the error was discovered quickly, my opinion is Microsoft asking for the money back was not cool. It is like kicking a man when he is already down.
March 10th, 2009 at 10:44 am
Microsoft should have kept quiet and never informed the employees of the mistake.
March 10th, 2009 at 11:08 am
I think it would have been better to notify the employees that they had been overpaid, but that as it was their mistake, they would allow them to keep the excess payments, thus avoiding the bad publicity, and not drawing attention to the fact that they had made the mistakes. Then if it had gotten out to the press, it would have made them look, rather than the bad impression it gave by asking them to pay it back.
March 10th, 2009 at 1:33 pm
I don’t have much direct knowledge of severance packages from either side of the coin. However, common sense tells me that if you layoff/terminate an employee, offer a severance package at x dollars, and then realize that the calculation was wrong and thus overpaid the employee, let it go! Take a lesson from it and move on. To add salt to a wound by trying to explain to these employees that not only are they out of a job, but now they have to pay back what they “weren’t supposed to get” is just insensitive and rude. Fix your error for the future and move on!
March 10th, 2009 at 1:33 pm
They were right to request it back because now it is unfair to the other 1375 employees who were laid off and presumably received the correct severance pay. In effect, they’ve all been shorted $4-5,000.
March 10th, 2009 at 1:41 pm
I don’t know if I agree. I think Microsoft has every right to ask for the overpayment back. What if a bonus was sent to current employees that was wrong? Should it not be fixed? If the direct depost file was sent to the bank twice, should the employees get paid twice? Only 25 employees were overpaid. How many employees does it take before it becomes prudent to recover the expenses instead of just writing them off? Seems everyone in America thinks it is okay to get a free ride.
March 10th, 2009 at 3:15 pm
I do not see mention if any of the 25 overpaid employees came forward. Usually a severance package would be communicated to the recipient. These are sad times, but the employees were not entitled to the money.
March 10th, 2009 at 4:44 pm
I have to agree with Greg that Microsoft has every right without the bashing. And there does seem to be a “free ride” sentiment in the USA today. Unfortunately, I think it’s the way a lot of Baby Boomers and the generation right before raised their children, and now it’s begun to pervade our whole society. I think it also stems from much of the media reporting in a way as to foster an entitled attitude.
March 11th, 2009 at 8:33 am
I tend to agree that the company has the right to request the money back. If you made a deposit into your own personal bank account, and the bank made a mistake and deposited that money into someone else’s account, would you just say, “Oops, well I guess they should get to keep it even though it was a mistake”? Probably not. You would probably request the money back immediately. The company has the right to do the same. Now, that being said, I would not be opposed to the company keeping quiet and just letting it ride since it will raise the question of unfair severance for all those who were not part of the error.
March 11th, 2009 at 8:56 am
I think Micro-Soft was right in asking for the money back. It was a mistake and unfortunatly that happens. I just think it is unfortunate that it became so puplic and the employees get to keep the money because it is unfair and causes bad feelings with the employees that didn’t getting the mistake made with them.
March 18th, 2009 at 3:56 pm
I believe Microsoft should be able to ask for the money back. I’m sure the employees were communicated to how much severance they would receive. It shouldn’t be a surprise to them that they were overpayed.
As for the 1,375 employees who might be mad about not being part of the mistake, I think it’s stupid. My girlfriend is like that. Not too long ago, we went on a cruise with two other couples. We played BINGO. One night, one of the couples we came with won $500. The next night, the other couple won $300. I was happy for them and excited. My girlfriend was mad they won and we didn’t. She would have rather none of us won.
Taking the money away from our friends doesn’t help us, but it makes her feel better for some morbid reason. I wonder if any of the 1,375 others are like my girlfriend.
March 24th, 2009 at 8:04 am
I think Microsoft did the right thing in issuing the letters to recover the extra moneys paid. Whether they are able to get the money back or not is another issue. By not claiming the money back Microsoft is opening itself to potential suits from the employees who were paid correctly. However this is is my opinion and Iam neither an HR person or a lawyer. We live in a litigous society.
May 12th, 2009 at 12:53 pm
Absolutely Microsoft has the right to ask for the money back.
what is the matter with honesty and integrity? the employees should have come forward and offer the money back because they know there was an error. severance packages are given to the employees and everything is spelled out as to the terms and amount that they are given.
In a hard time like this, the laid-off employee 100% will make sure that he was paid exactly what was written on his/her severance contract. so from the on-set these employees knew that a mistake was made. it was really up to them to own up to microsoft’s error.
June 22nd, 2009 at 10:08 am
A few thoughts….
a) Nicholas – Time for a new girlfriend. If the woman that you are currently with is so filled with avarice and jealousy that she cannot harbor others having success, she will be jealous of every birthday of yours or of father’s day or any other celebration that is not directed at honoring her. You don’t need grief like that in your life.
b) This is a very complex issue. It does not seem to be clear that the 25 employees were told that they would receive the higher amount, or not. If they were told the severance amount, and the checks matched, I think MS is out of luck. If the amount they were told did not match the checks, they probably should pay the difference back for the sake of their own integrity.
BUT, bear in mind that the senior level managers and shareholders of Microsoft will probably not miss that $100,000 dollars very much. This is a major corporation, and they make their money from essentially having a monopoly on information. We live in a capitalist society, so their behavior on many levels is rewarded, but at the end of the day, the real question is whether or not they should have laid off the 1,400 to begin with. That number is huge, but I am sure Microsoft hires that many people over the span of a year or two. Maybe someone can supply the numbers. Why couldn’t Microsoft make smaller improvements one department at a time, and work with their employees to find them jobs in MS or elsewhere, or at least give them the opportunity to seek employment while they are still employed? What ever happened to having a heart and taking care of the people who you have agreed to employ? Companies seem to treat those of US that work for a living more and more like cattle every day. We need to get away from that, and companies have to realize that they need to have good ideas and act with compassion and dignity. Only then will they truly be successful. What good is a venture that is only interested in wage slaves that they can get for the lowest price possible? How about providing real value to society both on a capitalist and holistic level? Leaders of the world, are you listening?
June 22nd, 2009 at 10:59 am
I don’t know as I agree with your assessment, Frank. Is it really big companies’ job to find employees jobs, or keep them on even when they are not needed, just to be honorable? We have such a “big companies are evil” attitude these days we want them to be parents/caretakers to employees. We expect companies to shell out billions of dollars in health insurance, retirement and other benefits even when the viability of the company is at risk. Yes, it is unsavory that 1400 people had to be laid off, but if any company continues with an overloaded payroll and all it’s associated costs for too long, the entire company suffers and ALL the employees would eventually be out of jobs. I think we have to stop expecting employers to do it all. We should expect safe working conditions, fair pay and access to group rates for benefits. Beyond that, employers should not have to be caretakers/parents/benefactors to their employees. Between the government’s gazillion handouts and employers, the average individual doesn’t have to be responsible for himself at all anymore.
July 6th, 2009 at 3:20 pm
While I see it is a PR mistake – I tend towards a policy of honesty and fairness; which is those who received the extra $5K should give it back. What’s next – will the remaining individuals file a class action suite saying they were unfairly compensated for their severance? These are tough times but fact is, many industries and companies don’t provide much at all – that should thanks their lucky stars they were treated with respect and work hard to get the next job
July 15th, 2009 at 11:26 am
The key point not clarified in the article is what did the offer letter state. If the letter had the incorrect amount, then the ex employee keeps it. If the payment amount was greater than the letter, then the ex employee needs to pay it back. But in either case, all the people at Microsoft responsible for the error need to take a step back and determine why it occurred….maybe they were just too overworked due to all the layoffs!
January 5th, 2010 at 1:33 am
Keep working at this, great job! This was what I needed to know. We are all experts on something!
February 17th, 2010 at 7:50 pm
Wonder how many people here lost their job. Who fault is it when you got lay-off, the HR does not talk to you more than 1 sentence and give you the toll-free number to call. If you make a mistake, then you have to pay for it. If you make a mistake when driving, then you have to spend money fix the car. If you make a mistake of saying something to your wife that you should not, then you are in the dog house. If you mistake not to pay the credit card on time, then you have to pay the late fee.
In the end, don’t expect someone to pay for your mistake.