“The smallest severance pay possible” - Bethesda union vows to fight as studio employees reel from “bare minimum” payout following mass Xbox layoffs

Following Xbox’s July layoffs, Bethesda Montreal employees face a severance dispute with Microsoft. Workers were told on July 6 they would remain employed until September 2026 while the company negotiated severance with OneBGS, the studio’s labour union. However, termination letters arrived on July 17—the same day Bethesda announced its Fallout release roadmap—offering what the union characterizes as “the smallest severance legally possible without bargaining with the union.”

Immediate consequences included the termination of group health insurance for affected workers. OneBGS alleges Microsoft violated Canadian labour laws by failing to properly negotiate with the union before issuing severance. The union has filed a formal legal complaint, arguing that the company acted in bad faith by reversing its July 6 pledge of continued employment.

The dispute highlights ongoing tensions in the gaming industry over severance practices during widespread layoffs. OneBGS’s criticism focuses on Microsoft’s apparent strategy to circumvent union-negotiated severance by offering only the legal minimum—a practice workers’ advocates argue undermines labour protections.

Sources

• “The smallest severance pay possible” - Bethesda union vows to fight as studio employees reel from “bare minimum” payout following mass Xbox layoffs
• Bethesda union slams Xbox for offering the ‘bare legal minimum in terms of severance’
• Union accuses Bethesda of violating labour laws in Canada following layoffs at Montreal studio