Microsoft to save cash by slashing employee benefits

Microsoft – hardly known for its lack of cash – has told employees it will be cutting their medical care allowance and other benefits in an effort to cut costs.

The unlucky US staff were told they will now be expected to cough up more towards the cost of their prescriptions if they choose brand names over generic medications and will see their stock option discounts reduced from 15 per cent to 10 per cent in an effort to save the company tens of millions of dollars.

Staff joining the Redmond giant will also be rewarded with less annual leave, while new parents will find they have a smaller timeframe in which to take their parental leave.

Ken DiPietro, corporate vice president of human resources, told employees via email: "These benefit changes will significantly reduce our operating costs... They also better align our benefits with those of our competition while still keeping us ahead of the market average," adding the changes would better balance employees' and shareholders' concerns.

The move comes as part of Microsoft's strategy of trying to maintain its operations' costs for 2004 at the same level as those for 2003.

In September, Microsoft also put a stop to its free stock option scheme, which had turned some lowly techies into millionaires.

It's not all bad news though - some employees' perks won't be ditched. Staff essentials such as free fizzy pop at work and gratis gym memberships will remain untouched.