Nortel Lays off 3,200 without Severance

by Jordan Yerman | February 25, 2009 at 11:58 am

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Nortel is laying off 3,200 employees, copmrising 10% of its workforce. The ailing Toronto-based telecom giant had previously filed for Chapter 11 bankrupcy protection, and so does not have to deliver severance pay to its US and Canadian employees.

The cuts represent roughly 10 percent of Nortel's workforce of more than 30,000. At the peak of the tech boom in 2000, the company employed more than 90,000 people.

The laid off employees will not get severance payouts, which the cash-strapped company suspended when it filed for bankruptcy protection last month.

"We do not have the flexibility, particularly in North America -- Canada and the U.S. -- for us to be paying severance pay," Chief Executive Mike Zafirovski told Reuters, adding that the company will respect whatever country-specific legal obligations it has to its staff.

While Nortel has shed a tremendous number of jobs, it has not ruled out further layoffs.

Duncan Stewart, an analyst at DSAM Consulting, said Nortel continues to grapple with weakness in demand for its products, and estimated the company needs a minimum of 15,000 to 18,000 employees to continue in its present form.

"So in other words, no, we cannot say this is the last cut," he said.