Microsoft Will Not Seek Overpaid Severance

Some of the 1,400 employees laid off by Microsoft last month received a letter asking for the return of money paid by mistake.
Microsoft on Monday said it has decided not to seek repayment of excess funds paid to laid-off workers last month.

Of the 1,400 employees let go by the software maker, 25 received a letter last week from their former employer asking for the repayment of money paid by mistake.

The letter, obtained by TechCrunch and published with the financial details redacted, asks some of the laid-off employees to send a check or money order, payable to Microsoft Corporation, within 14 days. "This letter is to inform you that an inadvertent administrative error occurred that resulted in an overpayment of severance pay by Microsoft," the letter begins. "We ask that you repay the overpayment and sincerely apologize for any inconvenience to you."

The former Microsoft employees were informed that they were overpaid as a part of their severance payments from the company. Those not responding within the allotted time period were warned that they could face tax obligations for the overpaid amount rather than the amount they are due.

Microsoft acknowledged the error and said it will not seek repayment of the overpaid funds. The overpayment amount was between $4,000 and $5,000 per employee, according to reports.

"This was a mistake on our part. We should have handled this situation in a more thoughtful manner," a Microsoft spokesperson said in an e-mail. "We are reaching out to those impacted to relay that we will not seek any payment from those individuals."

John A. Challenger, CEO of outplacement consulting firm Challenger, Gray & Christmas, said that he finds it hard to fault Microsoft for anything other than a clerical error. "The world is such a fishbowl now that these sorts of embarrassing mistakes are things that don't get hidden," he said.

Microsoft, he said, probably sent its laid-off workers an initial severance letter that spelled out exactly what kind of compensation they were entitled to. "Very few people leave without a letter that shows what the company is providing," Challenger said.

That being the case, anyone choosing to ignore Microsoft's request and keep the overpayment would put himself or herself in legal jeopardy, were Microsoft inclined to pursue its rights in court. But the company's decision to drop the matter shows that the public relations value of letting the matter drop is worth more the company expected to recoup.

In any event, Challenger suggests that it's not reasonable to assume that Microsoft, as a large company, should just swallow the mistake.

"What if they'd put an extra three zeros on it?" he asks. "Of course they'd expect to get it back."