Shopify announced on Tuesday that it would be laying off about 1,000 employees, or roughly 10% of its workforce. These employees will be offered 16 weeks of severance pay, plus an additional week for every year of their tenure at Shopify, CEO Tobi Lütke wrote in a company memo.
"We want to support each of you through the coming weeks and months as much as possible, so we're offering a generous severance package," he wrote.
But earlier this year, before the publicly announced layoffs, the Canadian e-commerce company quietly laid off at least 50 employees, The Globe and Mail first reported. These employees were offered far less severance pay, four people familiar with the matter told Insider. These people said some of these laid-off workers were offered as little as four weeks of severance pay and asked to sign nondisclosure agreements to receive it.
One former employee who was laid off earlier in the summer said they were told they were being let go because of a reorganization, not a performance issue.
"It was completely out of nowhere," they said.
In addition to 16 weeks of severance pay, employees affected by the large layoff round announced this week were also offered a number of benefits not extended to those laid off just a few weeks ago, according to those familiar with the matter.
"We'll remove any equity cliff, and extend any medical benefits," Lütke wrote in the memo published Tuesday, adding that Shopify would offer outplacement services, pay ongoing internet costs, and allow employees to keep home-office furniture the company provided when it went remote early on in the pandemic.
The memo added that Shopify would provide a "kickstart allowance" that workers could use to buy new laptops.
Representatives for Shopify did not return Insider's request for comment on the discrepancy in severance packages.
The company also recently canceled some internships it had planned for the fall. It additionally delayed a compensation overhaul it had planned in response to employee concerns about the company's plummeting stock.
On Wednesday, the day after the large round of layoffs was announced, Shopify reported earnings that disappointed investors.
During the call, Lütke said Shopify had hired aggressively to match the explosive demand the company saw for its products in 2020 and 2021. Pandemic-related lockdowns and restrictions had sent many shoppers online, and more businesses launched online to capitalize on the increased interest, making Shopify's products more relevant.
But e-commerce has since "normalized," Lütke said during the call. He acknowledged the company had miscalculated the bets it placed on e-commerce continuing to grow dramatically even once the pandemic slowed down.
"We are going to a staffing level that we would be if COVID wouldn't have happened," he added.
If you're a Shopify employee affected by the layoffs or have a story to tell, contact this reporter at mstone@insider.com or on the secure-messaging app Signal at 646-889-2143.
