Microsoft's 3,200 Xbox layoffs trigger labour complaints in two countries

Microsoft is facing labour complaints in both the United States and Canada after unions alleged the company mishandled its latest round of 3,200 planned layoffs across its Xbox gaming business.

According to Game Developer, the Communications Workers of America (CWA) and CWA Canada have filed or announced unfair labour practice complaints, claiming Microsoft did not properly consult unions before implementing job cuts affecting unionised employees at several game studios.

Microsoft said it respects employees' right to organise and has begun discussions with the union over the effects of the layoffs.

Unions allege failures in consultation

According to Game Developer, a complaint filed with the US National Labor Relations Board (NLRB) names Microsoft and several subsidiaries, including Xbox, ZeniMax Media, Bethesda Game Studios and id Software.

The complaint alleges Microsoft:

• Failed to provide required information to the CWA.
• Engaged in bad faith bargaining.
• Made unilateral changes to employee contracts.
• Took coercive actions during the bargaining process.

The CWA filed the complaint on 15 July 2026, according to the report.

Separately, CWA Canada said it intends to pursue legal action over layoffs at Bethesda Game Studios Montreal.

Carmel Smyth, President of CWA Canada, told Game Developer the unions believe Microsoft dismissed employees without notifying or consulting the union while collective bargaining was underway.

She said employers cannot arbitrarily change working conditions during negotiations for a collective agreement and added the unions would continue pursuing legal remedies where necessary.

Layoffs affect multiple Xbox studios

Microsoft announced earlier this month it plans to eliminate 3,200 roles across its gaming division before the end of the current financial year.

According to Game Developer, the cuts affect several Xbox-owned studios, including:

• Obsidian Entertainment
• id Software
• ZeniMax Online Studios
• Bethesda Game Studios

A CWA spokesperson told the publication Microsoft did not undertake what the union described as "decisional bargaining" before announcing the layoffs on 6 July and informing affected union members.

Several employees who spoke anonymously to Game Developer said the redundancies had resulted in the loss of experienced staff across studios.

Workers stage protests

The legal action follows protests organised by affected employees earlier this week.

Workers and supporters held "Save Our Devs" rallies at multiple locations, including Microsoft's headquarters in Redmond and ZeniMax's office in Rockville.

According to Game Developer, more than 150 people attended the Rockville demonstration alone.

Simon Prefontaine, a union organiser and former Bethesda Game Studios employee, said supporters gathered across six locations to protest the layoffs and announced the unions would challenge the legality of the workforce reductions in both countries.

Microsoft responds

In a statement provided to Game Developer, an Xbox spokesperson said the company recognises the impact of the layoffs on employees and has already contacted the union.

The spokesperson said Microsoft respects employees' right to make their voices heard, has begun effects bargaining with the union and remains committed to supporting affected workers while positioning the organisation for long-term strength.

The company did not address the specific allegations raised in the labour complaints.

Legal process now under way

The complaints mark the latest challenge for Microsoft as it continues restructuring its gaming business following another major round of job cuts.

The outcome will depend on labour authorities in the United States and Canada as they review the unions' allegations. Meanwhile, Microsoft's planned workforce reductions across Xbox remain in progress, with both sides preparing to continue discussions through the applicable legal and collective bargaining processes.