The 1,900 employees Airbnb announced it is laying off on Tuesday will be leaving the company with an unusually generous severance package.
U.S. employees who are laid off, amounting to 25% of the company’s workforce, will receive “14 weeks of base pay, plus one additional week for every year at Airbnb,” CEO Brian Chesky, said in a note to employees.
They will also have 12 months of health insurance paid for through COBRA. For employees outside the U.S., Airbnb will cover their health-insurance costs “through the end of 2020.” AIrbnb’s decision to offer all employees 14 weeks of base pay regardless of how many years they’ve been with the company is, however, unusual.
“While we know Airbnb’s business will fully recover, the changes it will undergo are not temporary or short-lived. Because of this, we need to make more fundamental changes to Airbnb by reducing the size of our workforce around a more focused business strategy,” Chesky said. (Airbnb declined to comment further.)
In 2019, companies offered 1.1 weeks of severance per year of service with an average of 19.4 weeks of severance total, according to a survey released last year of 10,000 job seekers conducted by Challenger, Gray and Christmas, a Chicago-based outplacement and career-transitioning firm. Typically, severance packages are tied to years of service, Challenger said.
Within the hospitality, hospitality and travel sector average severance was about 2 weeks per year of service and 19 weeks total.
Some 30 million Americans have filed for employees in the weeks since the coronavirus pandemic took hold in the U.S. and businesses began shutting down. Private-sector companies lost 20.2 jobs in April amid the coronavirus crisis, according to data released Wednesday from Automatic Data Processing Inc. Service-producing industries slashed 16 million jobs in April, led by a 8.6 million decline at hotels and restaurants. Retail and transportation also lost 3.4 million positions.
Airbnb’s decision to offer such a generous package is an “investment in goodwill to hopefully hire them back once demand returns,” said Andrew Challenger, vice president of Challenger, Gray and Christmas.Additionally, it is a way for both parties to make a clean break, he added.
“The jobs disappeared but the company wants to take care of employees who helped build it,” he said. Also, if Airbnb employees accept the severance package, they “forfeit their ability to litigate the termination decision.”
On Wednesday, Uber Technologies Inc
also announced it is laying off 3,700 full-time employees in customer-support and recruiting roles as the company deals with a steep drop off in rides volume due to COVID-19 and proceeds with its hiring freeze.
The company’s CEO, Dara Khosrowshahi plans to forego his base salary, which was $1 million in 2019, for the rest of the year, according a filing with the Securities and Exchange Commission. The company did not publicly disclose allotments for severance pay. But said it expects to ”incur approximately $20 million related to severance and other termination benefits.”
Marriott International Inc
has also trimmed its workforces in response to the plunge in global travel amid coronavirus. Unlike Airbnb and Uber, Marriott furloughed around two-thirds of its 4,000 corporate employees.
The hotel chain said it plans to bring back these workers once bookings return to pre-coronvirus levels. The majority of furloughed employees will also be receiving health-care benefits, but they will not be receiving a paycheck. However, they are still eligible for unemployment benefits.
The generous package also boosts Airbnb’s reputation, said Julie Schweber, a senior knowledge adviser at the Society for Human Resource Management (SHRM).
“It demonstrates that they treated people with respect and dignity, and people don’t forget that,” she said, applauding Airbnb’s actions. “When layoffs are done right folks may love coming back if things change.”
On top of the severance pay and health insurance Airbnb is offering, laid off employee are also being allowed to keep their
laptops stating that they are “an important tool to find new work.