Update (2009-03-05): Microsoft has since backtracked and stated that they will not ask for the money back after all.

In what has to be one of the most unpleasnt newes an out-of-work person can get, Microsoft has asked some of the 1400 people it recently laid off to refund part of the severance package.

TechCrunch isn't mincing any words about how they feel about Microsoft's handling of the incident:

Talk about adding insult to injury. Apparently Microsoft has inadvertently overpaid severance to some of its recently laid off employees, and is now asking for some of the money back. It's unclear how many of the 1,400 employees laid off last month were affected, but we've confirmed that it wasn't a single isolated incident (we've contacted Microsoft for a response). We're also hearing that some employees may have been underpaid as well.

While the payroll error must be irritating in and of itself to these laid off workers (severance is a sensitive subject), it appears that Microsoft HR isn't even bothering to explain how it happened (employees are instructed to call the office, which is closed for the weekend, if they want to know the details). Given that it was Microsoft HR that screwed this up in the first place, you'd think they'd at least include the calculations they made and point out where the error took place.

Scanned image of an actual letter is below. The amount is blacked-out, but by doing some careful measuring, I have ascertained that the 5-digit ZIP code fits nicely over the Net amount due box, and leaves room for two more digits (presumably these are digits after the decimal point). Assuming they used the same font-size all over the letter, that means the clawback is for a five-figure amount, the least of which is $10,000.

Yes, it is the company's money. Yes, the people really aren't owed the money. It works like this if the ATM spits out $1,000 at you as well--you won't get to keep it. But still getting a letter asking back $10,000 or more has to feel bad.

Some wits are commenting that the people should keep the money--what is Microsoft going to do, fire them?