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Beleaguered shared workspace provider WeWork reportedly lost US$1.25 billion in revenue in the third quarter of this year.
But its financial woes aren’t the only thing making the news, with the company announcing on Thursday (21 November) that it is laying off 2400 of its employees – representing just under 20% of its workforce – in what it says is in the interest of “making a more efficient organisation”.
This follows on from recent revelations that many ex-employees are dissatisfied with the severance package offered by the co-working company as it seeks to cut costs.
The first round of lay-offs occurred at Meetup – a service for in-person social events that was acquired by WeWork in 2017.
On 4 November, Meetup laid off 25% of its workforce – around 50 employees – it was revealed on the recode website.
The redundancy package provides three months of so-called garden leave, where an employee remains on the payroll with benefits but stops working — in addition to one month of severance pay.
However, the offer of four months’ severance offered to staffers pales into insignificance when compared to the payout to former WeWork CEO and founder, Adam Neumann – who received a US$1.7 billion ‘golden parachute’ upon his departure from the company last month. This despite reports of the financial mismanagement and erratic behaviour by the former CEO.
In addition, the terms of agreement for the severance contract also requests that employees being made redundant waive their right to sue the company over workplace issues and agree to a non-compete clause.
The implications of this are that the employee cannot work for a company that competes with any of WeWork’s broad sweep of business interests under a preexisting employment contract that is understood to be between six to 12 months.
As WeWork employees adopt a nervous wait-and-see approach, it’s understood the much larger cuts of as many as 4000 jobs may be in the pipeline. It’s a sobering consideration given the widely held belief that employees made redundant should have been given a better deal – especially given the unprecedented payout that Neumann received.
“WeWork is happy to cash out (Neumann’s) equity and give him a big check, but employees like me that need that cash aren’t getting any value for our equity,” one anonymous former Meetup employee told recode.
“It’s kind of insulting they’re describing the layoff packages as generous,” said the anonymous former Meetup employee adding that that they were told not to discuss the terms of the deal and that WeWork was “monitoring” employees and would take “aggressive action” if details were disclosed.
The former Meetup employee said that HR repeatedly reassured laid-off workers that the severance offer given to rank-and-file employees was “generous”, adding that terminated employees were given until November 19 to sign the severance agreement, or they would walk away with nothing.
“In terms of the non-compete, what does that even mean? So we can’t work at a school, a co-living facility, a gym, a tech company? There are so many things,” the former employee said.
“The thing with WeWork is the fact that the CEO ran essentially a scam and is walking away very wealthy. And all these workers are getting screwed,” said Rebecca Givan, a professor of management and labour relations at Rutgers University.
Parts of this article were first published on the recode website.
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