Tech companies offer lay-back time to stem need for lay-offs

Faced with a still lagging economy, a handful of tech companies has decided to reduce costs by implementing mandatory employee holidays, perhaps figuring that telling workers to lay back for a week is better than telling them they are laid off.

Sun Microsystems and Hewlett-Packard (HP) are planning to shut down their US offices for the July 4 holiday week. Sun is asking all employees from customer and sales support to finance staff to take paid vacation time, or go without pay if they have no paid time left, a company spokeswoman said.

Likewise, HP said that it would close all of its US offices in the week surrounding the Independence Day holiday.

HP's Australian operation, however, will not follow suit, a local company spokeswoman confirmed. She added, the US parent was on a cost-cutting drive because "business was slow" for HP there, but for HP Australia it would be business as usual.

Web security and address provider VeriSign in the US is asking employees to take at least three paid vacation days this quarter, with eyes on the July 4 week, a spokesman said.

Curbing costs through mandatory employee holidays is not an entirely new idea for the big IT vendors, who were forced to take similar measures last year when the economic slowdown hit with full force.

Sun, HP and Compaq Computer all closed their doors for the week of July 4, 2001.

Jim Hassell, managing director of Sun Microsystems Australia and New Zealand, said the US shutdown would have "minimal impact" on the Australian market. "In the US it makes a lot of sense to close the company in the first week of July because it's the end of their fiscal year and the start of the holidays."

Hassell said the US operation would "maintain" the usual set of technical and customer support staff during the July shutdown. "So there will be no impact on local customers. And if you've got a [support] issue you can go back to the labs in the US if this is necessary," he said.

Meanwhile, Sun Australia will close its operations for the Christmas week and implement a paid leave policy among its 670-plus local staff. According to Hassall, the company aims to cut around 0.5 per cent of operating costs through the shutdown. However, he declined to quantify local annual operating costs.

He reiterated that local customer support staff would continue working in that period.

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