Back in July, Microsoft announced that it would be laying off 18 000 jobs worldwide over an unspecified period of time, including over 12500 employees acquired when they bought Nokia. Its latest round of layoffs claimed 3000 people last week and at least one division was closed. The division of Microsoft working on Xbox One Research and Development in China was closed with no prior notice and all of its over 80 employees were left without a job.
According to reports, a quick all-hands meeting was called and the employees were told that the division was being shut down with all Xbox One R&D Work moving to the United States. Employees in fact had been in working overtime the previous night on projects and on Friday came back to find various entrance cards and such were not working.
This appears to be in line with Microsoft’s other cuts to its Asia hardware centre set up in Shenzen back in 2005, though obviously deeper than most. It looks like that the lack of warning will cost Microsoft a pretty penny due to Chinese Labour Laws. All the staff refused the offered compensation package which was equivalent to $2560 each and one month’s pay. It appears this is likely due to the fact that under Chinese Law, employers must give the employees one month’s notice or pay a large compensation bonus. This would be equal to the employee’s monthly salary, multiplied by double the numbers of years the employee was at the business and an additional 2 months’ salary.
Microsoft has said their legal department will get in touch with all those who refused to sign off (IE Everyone) and “everything will be done in accordance with the Chinese laws”. Unless they managed to find an applicable loophole that statement will require a pretty large upfront payment to shut down the division to the various employees.
This is obviously not good news for the rest of Microsoft’s Asia hardware centre and may hint that Microsoft plans on centralizing more of its workforce as part of its cost cutting program. Also cut in October were many support staff across the company in part of its layoffs, meaning it may take longer to get support from Microsoft.
This marks over 17500 employees who have been laid off since July with Microsoft, bringing them close to the 18000 goal they had, with an expected finish date of January 2015 for these cuts. A quick look shows there will likely be one more round of cuts at Microsoft before the company says its done, though it will likely be smaller unless they exceed the 18000 target.