Microsoft been forced to allows around 25 staff whose redundancy pay was $5,000 (â‚¬3,928) more generous than it should have been to keep the overpayment, The Guardian reports.
Most of those made redundant were given a 12-week severance package. The company said the overpayments were due to an administrative error and initially demanded sacked staff return the money within 14 days. Microsoft has been forced to back down after a storm of outrage on the web.
In a statement, the software house said that it had mishandled the affair and would no longer be chasing repayment, The Guardian said.
Some 1,400 workers were made redundant in January as part of Microsoft's plan to cut 5,000 jobs over the next 12 months - the first mass lay-offs in the company's history.