Demands for severance pay from laid-off employees are growing stronger as tech companies continue to cut jobs amidst concerns about the economic downturn.
To get more severance, pay, laid-off employees are putting pressure on companies by hiring experts in negotiations or even lawyers. The Wall Street Journal (WSJ) reported that tech companies are facing the reality of having to suffer the aftereffects of severe layoffs due to strong demands for severance pay.
According to the newspaper, there are an increasing number of cases in which employees who have been notified of layoffs by tech companies hire lawyers or experts to negotiate with the companies to secure more severance pay as part of self-rescue measures.
Brian Liu, founder of Laura, a negotiation consulting firm, said, “Since last May, employees who received notice of dismissal from tech companies have requested consulting on severance pay negotiations.”
Two years ago, there was little demand for consulting related to severance pay. Rather, mentioning the conditions for severance pay during the dismissal process at that time was a kind of taboo. This was because they were able to receive higher salaries while changing jobs due to manpower shortages.
But the situation was reversed. As the economy entered a recession due to high interest rates, tech companies made the management choice of reducing employees, resulting in a series of layoffs.
Tech companies that enjoyed a boom during the pandemic have been making massive job cuts since last year. Big tech companies such as Meta, Amazon, Microsoft (MS), and Alphabet joined the layoffs.
The laid-off employees are demanding severance pay, arguing that it is unfair to lay off large-scale workers just because of the economic downturn. Demand for severance pay, which serves as a cushion against financial shocks after layoffs, has increased as the possibility of re-employment is not as high as before and the opportunity for a salary increase has decreased.
Regarding severance pay, the reality is that even tech companies do not have that much room for maneuver. It is not easy to ignore the demand for severance pay, as it is possible to rehire employees who were laid off if the economy improves soon. This is because if the image of the company is damaged and the morale of the dismissed employee is damaged, the possibility of re-employment will be eliminated.
The media added that dismissed employees’ demands for retirement conditions include, in addition to monetary demands for severance pay, maintenance of medical insurance for a certain period and unpaid leave until re-employment.