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I am a new hire at company X. Apparently, they have hired me and a few others to do automation testing on Contract Y2 on separate projects. How can it be that people with more seniority are being laid off due to the reason "lack of money". I was also told during orientation that contract Y was just renewed as Y2 for another 10 years, and they are hiring many people.

  • are people being laid off on the same team/projects and of the same profession as you? E.g. there might be no money for a manager or architect, but for a developer. Thus "lack of money" can well mean "lack of money to finance your role". – Frank Hopkins Sep 26 at 23:48
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    @Joe Strazzere I do think that I am being paid a little less for how much experience I have, but the pay is still quite sufficient, and I will have extra money to invest. – Gary Drocella Sep 26 at 23:49
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    Can you please add a country tag? Depending on jurisdiction and labor laws, your answer might well be "You cannot, that's illegal". – nvoigt Sep 27 at 5:51
  • Are these the same role or not? making people redundant but then hiring people for the same role at the same time - this could be illegal (does depend on your countries laws on redundancy) – Neuromancer Sep 29 at 23:05
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    I have added the country tag. – Gary Drocella Sep 29 at 23:21
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How can it be that people with more seniority are being laid off due to the reason "lack of money". I was also told during orientation that contract Y was just renewed as Y2 for another 10 years, and they are hiring many people.

I have worked on contracts where the customer changed the definition and rates for the various jobs when they renewed the contract.

They said that the definition of senior was changing from 10 years experience to 15 years experience; and for task X they would only pay the junior rate. That meant that a person that was doing task X had to take a pay cut in order to keep their job. If that cut was too much the senior employee quit, and they were replaced with a person who could work for the junior rate. In the worst case the cut in pay was more than 40%.

I have witnessed companies that seriously underbid because they felt that they might lose the customer. That meant that everybody had to take a 10% to 20% pay cut. That means that experienced people leave and they are replaced with people who can live on the lower rates.

I have seen companies cut benefits to try and preserve pay. Some people will switch projects to keep their benefits. A long time ago when my company had a pension there was one project where they couldn't count the time on the project towards the pension, and they were banned from a 401K match. Nobody stayed very long, and the only people that joined were ones who were told if they didn't they were out of a job.

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    Can you please add a location where you observed this behavior. It would be illegal where I live, so I guess it's not globally valid. – nvoigt Sep 27 at 8:21
  • These took place in the United States. These decisions did not make these companies popular choices to work for. They had a hard time keeping quality employees, because they had choices. – mhoran_psprep Sep 27 at 10:01

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