Microsoft announced the severance package for employees affected by its latest round of layoffs, saying eligible workers in the United States could receive compensation worth up to 39 weeks of base salary, reported Business Insider. The package also includes health insurance benefits, stock vesting in some cases and other support measures.
The announcement comes after Microsoft said it would cut around 4,800 jobs, or about 2.1% of its global workforce, as part of a wider restructuring. The company has continued to invest heavily in artificial intelligence while reviewing costs across different parts of the business.
Affected employees will remain on Microsoft’s payroll for at least 60 days and continue to receive their regular base salary during that period, reported Business Insider. After those 60 days, eligible employees will receive additional severance based on their years of service and job level. For most workers, the total compensation is capped at 39 weeks of base pay.
How is Microsoft’s severance package structured?
The company has linked severance payments to internal employee levels and the length of time workers have spent at Microsoft. Employees classified under internal levels 64 and below will receive one week of base pay for every six months of service. Those in levels 65 to 67 will receive two weeks of base pay for every six months worked. Senior executives at level 68 and above fall under a separate severance programme, reported Business Insider.
Microsoft is also extending other benefits to eligible employees. Workers at levels 67 and below will continue to receive stock vesting for either six or 12 months, depending on their years of service. The company will also provide six months of paid health insurance coverage. Employees can continue their medical coverage for another 12 months through COBRA if they choose to pay the required premiums themselves.
The severance terms are largely similar to those offered under Microsoft’s Voluntary Retirement Programme introduced earlier this year. However, the latest package provides health insurance benefits for a shorter period.
Why is Microsoft reducing its workforce?
The latest layoffs come as Microsoft continues to increase spending on artificial intelligence and cloud infrastructure. The company has projected capital expenditure of about $190 billion in 2026, with much of that investment going towards expanding AI infrastructure and building new data centres, reported Business Insider.
Although Microsoft’s Azure cloud platform continues to benefit from strong demand for AI services, those investments have also increased costs. Earlier this year, Microsoft also lost its position as the exclusive cloud provider for OpenAI’s models after changes in the partnership between the two companies.
According to the report, the latest workforce reduction mainly affects Microsoft’s sales division and its Xbox gaming business. Xbox is expected to reduce nearly 20% of its workforce as part of a broader restructuring effort.
Earlier this year, Microsoft also offered voluntary retirement buyouts to nearly 9,000 employees in the United States. The company announced the layoffs during a difficult period for its stock. According to Reuters, Microsoft’s shares fell nearly 23% during the first half of 2026, marking their weakest first-half performance since 2022.
Despite the latest job cuts, Microsoft’s severance package compares favourably with those offered by several other major technology companies. Salesforce offers between nine and 30 weeks of base pay, while Oracle provides four weeks of salary plus one additional week for every year of service, up to a maximum of 26 weeks, reported Business Insider. Meta has offered laid-off US employees 16 weeks of base pay, along with two additional weeks for every completed year of continuous employment.