Microsoft's Voluntary Exit Offer – What It Means for Employees in Germany

Introduction

On 26 October 2026, Microsoft announced a new “Voluntary Exit Offer” to roughly 60,000 employees – about a quarter of its global workforce, including some executives. The offer covers the U.S., Canada, the U.K. and India. Germany is not on the list.

That does not make the news irrelevant for Microsoft’s workforce in Germany. Microsoft has said it wants to make voluntary exits a regular part of how it manages its headcount. Layoffs also remain on the table. Employees in Germany should therefore know how a comparable offer would work under German law – and why its value here depends far more on their legal position than on the company’s “standard severance”.

This article explains the key facts, what changes if such an offer reaches Germany, and what employees should check before signing anything.

The offer at a glance

According to GeekWire, the main terms are:

The offer follows Microsoft’s first-ever voluntary retirement program in spring 2026. That program was limited to U.S. employees whose age plus years of service reached a threshold; about 30% of some 8,750 eligible employees accepted. Microsoft also cut 4,800 jobs in July 2026 and stated that layoffs will remain part of its approach.

Does the offer apply to employees in Germany?

No – not at present. Employees of Microsoft Deutschland GmbH are not covered, and they have no claim to receive a comparable offer.

There are good reasons why a U.S.-style buyout cannot simply be rolled out in Germany:

• No “at will” employment. In Germany, an employer needs a legal reason to dismiss an employee who is protected under the Dismissal Protection Act (KSchG). A buyout is therefore not just a goodwill gesture, but the price for giving up a protected position.
• Works council rights. Where a works council exists, a voluntary leaver program that is part of a restructuring regularly triggers co-determination rights. This may lead to a reconciliation of interests (Interessenausgleich) and a social plan (Sozialplan) under §§ 111, 112 BetrVG.
• Mass dismissal rules. Termination agreements initiated by the employer count towards the thresholds for a mass dismissal notification (§ 17 KSchG). A large-scale exit program can therefore require a formal notification to the Federal Employment Agency.

If Microsoft extends the concept to Germany, it will most likely take the form of a negotiated voluntary leaver program (Freiwilligenprogramm). Past German restructurings at Microsoft offered a useful benchmark: in 2017, Microsoft Deutschland reportedly offered up to 2.2 monthly salaries per year of service to employees who agreed to leave.

Severance in Germany: leverage, not a fixed formula

German law gives employees no general statutory right to severance. What an employee can negotiate depends on how well the employer could defend a dismissal in court.

In practice, negotiations start from a common rule of thumb, based on § 1a KSchG:

Severance = 0.5 × gross monthly salary × years of service

This factor of 0.5 is a starting point, not a ceiling. It goes up where the employer’s position is weak, for example because:

• the employee has protection against dismissal under the KSchG (more than six months of service in an establishment with more than ten employees);
• a selection based on social criteria (Sozialauswahl) would be difficult to justify;
• the works council was not properly consulted (§ 102 BetrVG);
• the employee enjoys special protection, e.g. during parental leave, as a severely disabled person or as a works council member.

Microsoft’s U.S. standard severance has been reported as 12 weeks of base pay plus two weeks per year of service. For an employee with ten years of service, that is roughly 32 weeks, or about 7.4 monthly salaries. Under the German rule of thumb, the same employee would start at 5 monthly salaries – but a factor of 1.0 or higher is common where an employer wants people to leave voluntarily. A German employee should therefore never assume that the U.S. package is the benchmark.

Important: if Microsoft were to move to dismissals instead, employees would have only three weeks from receipt of the written notice to file a claim with the labour court (§ 4 KSchG). Missing this deadline usually means losing all leverage.

Unemployment benefit, tax and stock awards

A voluntary exit in Germany is usually documented in a termination agreement (Aufhebungsvertrag). It must be signed in wet ink to be valid (§ 623 BGB). Four points deserve particular attention.

1. Blocking period for unemployment benefit (Sperrzeit) An employee who agrees to end the employment generally faces a blocking period of up to 12 weeks (§ 159 SGB III). The Federal Employment Agency makes an exception where, among other things, the employer would otherwise have issued an operational dismissal, the notice period is observed and the severance stays between 0.25 and 0.5 monthly salaries per year of service. Higher payments are possible, but then the agreement must be structured carefully – for example as a court settlement after a dismissal.
2. Notice period and suspension of benefits (Ruhenszeit) If the employment ends earlier than the applicable notice period would allow, part of the severance is treated as salary. Unemployment benefit is then suspended for a period (§ 158 SGB III). The end date should therefore match the notice period.
3. Tax Severance is free of social security contributions, but subject to income tax. Since 2025, the reduced tax rate under the “Fifth Rule” (Fünftelregelung, § 34 EStG) is no longer applied through payroll. It is only granted in the annual tax return. The net payment will therefore initially be noticeably lower.
4. Stock awards (RSUs) The U.S. offer includes continued stock vesting. In Germany, this is not automatic. Stock plans are usually governed by U.S. law and often provide that unvested awards lapse when employment ends. Continued vesting, accelerated vesting or a cash equivalent must be negotiated expressly and written into the agreement.

Executives and senior managers

This time, Microsoft’s offer reaches up to general managers and some vice presidents. Senior employees in Germany should check whether they qualify as an “executive employee” (leitender Angestellter) under § 14 (2) KSchG.

The bar is high. The employee must be entitled to hire or dismiss staff independently – a job title alone is not enough. Where the test is met, the employer can ask the court to dissolve the employment against payment of severance without giving reasons (Auflösungsantrag). The maximum award is generally 12 monthly salaries, or up to 18 for older, long-serving employees (§ 10 KSchG).

Most “Directors” and many “General Managers” at German tech subsidiaries do not meet this test in practice. They keep full dismissal protection – and the stronger negotiating position that comes with it.

Practical recommendations

If a voluntary exit offer, a termination agreement or a dismissal reaches you at Microsoft in Germany:

1. Do not sign under time pressure. German law gives no statutory right to revoke a termination agreement once signed.
2. Assess your dismissal protection first. Your leverage – not the employer’s standard formula – determines what a fair package looks like.
3. Watch the three-week deadline if you receive a written dismissal.
4. Align end date and notice period to avoid a suspension of unemployment benefit.
5. Negotiate the whole package: severance, garden leave, bonus, RSUs, a good reference (Zeugnis) and, where useful, an early-exit clause (Sprinterklausel) that pays out unused salary as additional severance.
6. Ask the works council whether a social plan or program applies to your team.

Conclusion

Microsoft’s new Voluntary Exit Offer does not apply in Germany – yet. But it shows where the company is heading: more voluntary exits, alongside continued layoffs. For employees in Germany, any such offer must be measured against German employment law, not against the U.S. package. Those who know their legal position will usually negotiate a considerably better result.

This article provides general information only and does not constitute legal advice.

Sources

• GeekWire: Microsoft makes new ‘voluntary exit’ offer to about a quarter of its workforce (26 October 2026)
• UC Today: Microsoft Offers First-Ever Voluntary Buyout to Employees (April 2026)
• Der Standard: Microsoft Deutschland muss hunderte Stellen abbauen (July 2017)