Meta, Amazon, Microsoft & Alphabet May Incur Up To $4.7 Billion In Severance Pay Costs Amid Mass Layoffs

Meta, Microsoft, Amazon, and Alphabet are among the biggest tech giants that have announced mass layoffs in recent months.

Meta, Microsoft, Amazon & Google Layoff 50,000 Employees

istock

Meta has announced layoffs for around 11,000 employees, and Microsoft announced the layoff of approximately 10,000 employees. E-commerce giant Amazon announced the layoff of 18,000 employees, and Google too announced layoffs for about 12,000 employees. Mass layoffs at these four tech giants will cumulatively affect more than 50,000 employees.

Many tech titans have blamed over-hiring and cost-cutting for the difficult decision of mass layoffs in the face of economic uncertainty. But even the cost of laying off thousands of employees isn't small.

As per a Business Insider report, Meta, Amazon, Microsoft, and Alphabet are likely to collectively spend up to $4.7 billion on severance costs alone, as per their earnings reports.

Also Read: 'They Fire, We Hire' - German Companies Hiring Thousands Of Laid Off US Workers

Up To $4.7 Billion Severance Package Cost

Meta's severance cost totaled $975 million for the fourth quarter, but it said some of the cost would be offset by "decreases in payroll, bonus, and other benefits expenses." Meta could see its severance costs climb higher in the coming months, with CEO Mark Zuckerberg hinting at more layoffs.

According to the report, Microsoft will incur $800 million in severance pay costs in its second-quarter results. The company laid off around 1,000 employees in October after it ended the contracts of hundreds of recruiters and others working in talent acquisition in August. In January, it announced 10,000 layoffs.

As per the report, e-commerce giant Amazon's severance package spend amounted to $640 million in the fourth quarter of 2022. CEO Andy Jassy said on January 4 in a memo that the company would cut 18,000 jobs across its Amazon Stores, People Experience, and Technology Solutions divisions.

The latest of these four to join the layoff list is Alphabet. Google's parent company, as per the report, expects its exit package costs to range from $1.9 billion to $2.3 billion.

Severance Packages By Tech Giants

Alphabet-$2.3 billion

businesstoday

Laid-off U.S. employees will receive pay through the notification period and receive a 16-week base severance package with an additional two weeks for every year of employment at Google, CEO Pichai said in a memo to employees.

Laid-off employees will also have "at least" 16 weeks of share vesting accelerated and receive 6 months of health-care coverage, he reportedly said.

Microsoft-$800 million

Reuters

Satya Nadella, the CEO of Microsoft, announced mass layoffs affecting around 10,000 employees last month. The benefit-eligible U.S. employees of Microsoft, as per the report, would receive severance, six months of health care and stock vesting, and 60 days of notice.

Amazon-$640 million

bloomberg/getty

Amazon has been going through rolling layoffs since last November. As per the CNBC report, Amazon offered its devices and services employees a severance package that included a separation payment, transitional health benefits, and job placement.

And that's not all. Earlier last month, Amazon commenced another wave of layoffs, with the deepest cuts being felt in its retail and human resources divisions.

For retail employees in the U.S., Amazon is offering full pay and benefits over a 60-day period, when Amazon will keep them on the payroll but they won¡¯t be expected to keep working. After that period, Amazon will offer laid-off employees several weeks of severance, depending on their length of time with the company, a separation payment, transitional health benefits, and job placement.

Amazon¡¯s severance package appears similar for affected employees in other units. Human resources head Beth Galetti said the company will offer a separation payment, health benefits as applicable by country, and job placement.

However, as per the report, it¡¯s unclear if Amazon¡¯s severance package includes any provisions that would allow employees to accelerate the vesting of stock compensation. This matters to Amazon employees, as the company¡¯s compensation has historically been weighted heavily towards stock.

Meta-$975 million

indiatoday

At the time, Zuckerberg promised "every" laid-off employee 16 weeks of severance pay, plus two weeks for every year of service, as well as the vesting of restricted share units and health insurance coverage for a predetermined amount of time.

In December, some laid-off workers from a nontraditional apprenticeship program told CNBC they were receiving substandard severance packages compared with those of other recently laid-off employees. Instead of Zuckerberg¡¯s promised 16 weeks, they received only 8 weeks of base pay, among other material differences.

Also Read: Explained: How Apple Has So Far Avoided Mass Layoffs

Layoffs At Other Tech Giants

Besides Meta, Microsoft, Amazon, and Alphabet, many other tech giants have joined the long list of companies announcing mass layoffs.

Dell has announced 6,650 layoffs, IBM announced 3,900 layoffs, and SAP announced the laying off of about 3,000 employees recently. HP is also among the tech giants making job cuts, as it announced layoffs for about 6,000 employees later last year.

Many other companies, including Zoom Video, Ebay, and others, have announced layoffs this week.

For the latest and interesting financial news, keep reading Indiatimes Worth. Click here.