More details have emerged about Microsoft’s first voluntary retirement program, including who qualifies, what benefits are being offered, and how much the company expects the move to cost.
The program gives eligible longtime US employees a chance to leave with severance, healthcare continuation, and accelerated stock vesting, according to reports from GeekWire and The Times of India. About 8,750 workers, or roughly 7% of Microsoft’s US workforce, qualify for the one-time offer.
The new details suggest Microsoft is using a softer workforce-reduction strategy, giving veteran employees a supported exit path rather than relying only on another round of abrupt layoffs.
Compensation details
According to an internal affairs memo that GeekWire says it reviewed, the company has begun notifying eligible employees of the one-time voluntary retirement opportunity.
About 7% of its US-based workforce qualify. These are employees who are at level 67 or below and whose age plus their years of service at Microsoft total 70 or more. The Times of India also notes that employees at the senior director rank, or those on sales incentive plans, are not eligible, which brings the number of eligible employees to 8,750 among its 125,000 US-based workers.
The program combines a cash payout, limited continuation of healthcare, and stock incentives. Eligible employees who accept the offer can receive between eight and 39 weeks of their base salary, depending on their level and length of service.
Microsoft will also extend access to medical, dental, and vision coverage for up to five years. The first year will be fully covered by Microsoft, while employees will pay the standard fee until it expires. Employees whose Medicare begins at 65 and have yet to complete Microsoft’s five-year healthcare will forfeit access to Microsoft’s when they clock 65.
Beyond the cash payout and healthcare, the company is also including accelerated stock vesting. Most participants would receive an additional six months of vesting, and those with over 24 years of service would receive up to 1 year, while certain long-serving employees could continue to vest under their existing terms.
What else is contained in the program
In the memo, the company frames it as a one-time transition option for longtime workers. Chief People Officer Amy Coleman wrote in the memo that “many of these employees have spent years, and in some cases, decades, shaping Microsoft into what it is today,” and that Microsoft wants to help them transition “on their own terms, with generous company support.”
That support, according to Microsoft’s CFO, Amy Hood, is expected to cost the company $900 million, reflecting how expensive a voluntary goodbye can be.
Coleman also added that Microsoft will simplify its compensation structure by reducing pay levels from 9 to 5. Furthermore, she noted that managers would have greater flexibility in awarding stock grants to longtime employees, regardless of their current performance ratings.
Employees who accept the offer will have a 30-day window to make their decision.
Given the benefits involved, many eligible employees will take on the rare opportunity. GeekWire also notes that employees who take on this offer do not appear to have any restrictions on finding another job after leaving. And if it happens that there indeed aren’t any sort of reemployment restrictions, then many may indeed take on it, instead of risking another round of layoffs, which may likely come soon.
Also read: For more on AI-driven workforce cuts, read TechRepublic’s coverage of Coinbase’s 14% staff reduction.
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