Microsoft wants cash back from sacked employees

In what might prove to be a public relations disaster, Microsoft Corp has notified some employees laid off last month that they would have to return part of their severance pay, saying it had made an accounting error.

The company laid off 1,400 workers last month, the first of 5,000 jobs Microsoft has said it plans to cut over the next 18 months. The error is believed to have overpaid some of the sacked employees and underpaid others. Those that were overpaid were sent letters last week requesting them to refund the company by sending a check or money order.

"An inadvertent administrative error occurred that resulted in an overpayment in severance pay by Microsoft," the letter, publicised by the blog TechCrunch, states. "We ask that you repay the overpayment and sincerely apologise for any inconvenience to you."

A Microsoft spokesperson confirmed that the letter had been sent, but refused to disclose how many former employees were affected or the total amount that was overpaid, calling the incident "a private matter between the company and the affected people." No explanation was given for the accounting error, which also underpaid some ex-employees.

The recession has taken its toll on even the mightiest of technology companies. Apart from Microsoft, IBM too has suffered embarrassing disclosures, such as this severance issue. For its part, 'Big Blue' has quietly laid off up to 5,000 employees since the beginning of the year.

After having said in the first week of January it would not retrench people as part of its planned cost cutting for 2009 (See: No layoffs at Microsoft despite major cost-cutting in 2009)17 days later Microsoft handed out pink slips to 5,000 people (See: Microsoft pink-slips 5000 staff, despite profits)