Microsoft Offers Early Retirement to Employees, First Time in 51 Years

A surprising move has just been taken by Microsoft amid the high costs of the global artificial intelligence (AI) race. The company behind the Windows operating system has officially offered a voluntary early retirement programme to its employees. This efficiency policy is the first of its kind in the 51-year history of the company. In response to this surprising decision, Microsoft’s shares reportedly plunged more than four per cent during Thursday’s trading in the US, which also pulled down shares of other software companies. The offer is aimed at around seven per cent of the total, or the equivalent of 8,750 employees. To determine eligibility, Microsoft uses a unique formula called the “Rule of 70”, as compiled by KompasTekno from Forbes. Employees are eligible to apply for this retirement if the combination of their age and length of service at the company reaches 70 or more. The offer applies to employees at the Senior Director level and below, but excludes those in sales incentive schemes. Nevertheless, based on Microsoft’s previous severance standards, employees are predicted to receive fantastic compensation. Microsoft’s standard severance usually includes base salary for 12 weeks, plus an extra two weeks’ salary for each year of service. As an additional illustration, during the 2023 layoff storm, CEO Satya Nadella also released employees’ shares early and provided health insurance benefits for six months. This figure is quite competitive with the severance standards of other tech giants. Meta, for example, provided 16 weeks of base salary in 2022, while Google provided 14 weeks of base salary for a similar programme last year.