Microsoft withdraws payback demand

Microsoft Corp, portrayed in a shoddy light after it asked some of the employees it sacked in January to return part of their severance pay, has been quick to backtrack, saying Microsoft is "reaching out to those impacted to relay that we will not seek any payment from those individuals."

The Redmond, Washington-based company acknowledged on Sunday that it had tried to get the overpaid workers to return the extra money. But late on Monday, it reversed course. (See: Microsoft wants cash back from sacked employees)

"This was a mistake on our part," said a Microsoft spokesman in an e-mailed statement. "We should have handled this situation in a more thoughtful manner."

However, the company continued to be silent about what caused the original error in severance pay accounting, which overpaid some ex-employees and underpaid others. According to reports, the underpaid employees have also been compensated.

The world's largest software maker, feeling the downturn in corporate and consumer spending, laid off 1,400 workers last month, the first of the up to 5,000 jobs it plans to cut over the next 18 months.(See: Microsoft pink-slips 5000 staff, despite profits)

Of the 1,400 workers let go last month, about 25 were overpaid to the tune of about $4,000 to $5,000 each, Microsoft human resources chief Lisa Brummel told CNE. Additionally, about 20 laid-off workers were underpaid.

Brummel reportedly said that in most cases, it makes sense for companies to recover money overpaid due to accounting errors, but called this situation an extraordinary one. She said she has spoken individually to most of the affected employees already to update them on their severance packages.