Microsoft is rolling out a tougher set of performance management policies, including a two-year ban on rehiring employees who were let go due to poor performance. The new rules apply to workers who receive the lowest scores (0–60%) on the company’s internal Rewards performance scale.
According to an internal email that was leaked to the media, employees flagged for underperformance will no longer be eligible for internal transfers. Instead, they will be presented with two options: enroll in a Performance Improvement Plan (PIP) or accept a voluntary separation agreement with 16 weeks of severance pay. However, once an employee agrees to participate in a PIP, the severance option is no longer available.
This policy shift comes after Microsoft laid off around 2,000 employees earlier in 2025 without offering severance, marking a clear move toward stricter performance expectations.
Managers will also have access to new tools to support the evaluation process, including a “ManageRewards slider” designed to better reflect and reward high performance.
The updated policies underscore a broader trend in the tech industry to drive productivity and move away from so-called “coasting cultures,” where underperformance is tolerated without significant consequences.
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