40% of Xbox's Union Workers Axed in Six Months

On July 6th, dozens of Bethesda Game Studios employees across the US and Canada were told on a video call that they were being laid off. Bad news, obviously, but there was at least a cushion: they'd stay employed through September while Microsoft negotiated severance terms with their union, OneBGS. Eleven days later, the Canadian workers on the Fallout and Elder Scrolls teams got emails telling them that promise was dead.

The termination letters, sent on July 17th, offered what OneBGS calls "the bare legal minimum in terms of severance: eight weeks of pay in lieu of the minimum legal notice, any outstanding vacation pay, etc." Workers were also told they would immediately lose access to their group benefits health insurance. No negotiation with the union. No September runway. In a statement posted on Bluesky, the union said it has filed a legal complaint against Bethesda for "continuing to violate labour laws in Canada."

"Bethesda and Xbox leadership depend on our labour to make them millions, and yet when we do, we are disposed of. The cycle of workers paying for the mistakes of management ends here."

July 17th was also the day Bethesda publicly revealed its Fallout roadmap, including Fallout 5 entering preproduction, Fallout 3 and New Vegas remasters, and a new Obsidian-led Fallout project. The juxtaposition of franchise celebrations and termination emails landing in the same news cycle is grim, and I don't think it's a coincidence that the announcements were timed to dominate the conversation.

435 Out of 1,205

The Bethesda Montreal situation is ugly on its own, but it sits inside a much larger pattern. According to an unfair labour practice charge filed with the National Labor Relations Board and obtained by Game Developer, Microsoft eliminated approximately 435 unionised workers out of around 1,205 bargaining unit employees in the six months prior to the charge being filed on July 15th, 2026. Forty percent of the entire unionised workforce, gone in half a year.

The charge, filed jointly by the Communications Workers of America (CWA) and CWA Canada, accuses Microsoft of failing to engage in decisional bargaining before announcing the layoffs, and of neglecting to provide notice or an opportunity to bargain over the removal of bargaining unit work. The filing describes the cuts as creating "an existential crisis" for the union and requests injunctive relief to preserve the status quo.

CWA Canada president Carmel Smyth told Game Developer that "the company has unlawfully fired people without giving notice to or discussing it with the union as the employer is legally obliged to do when we are in the middle of ongoing bargaining a collective agreement."

Xbox's response, provided to gamesindustry.biz, was corporate boilerplate: "We respect our employees' right to make their voices heard, and we recognise that this is a difficult time for many. We reached out to the union to begin effects bargaining and are committed to that process." Effects bargaining, for anyone unfamiliar, happens after the decision to lay people off has already been made. It's about the terms of departure, not whether the departures should happen at all. The union's complaint is that Microsoft skipped the step where it was supposed to discuss the decision itself.

An anonymous source familiar with the situation told Game Developer that Xbox is effectively telling workers "if we could give you less we would, but that's against the law." They also raised a question I think Microsoft's leadership should be asking itself: "How do they expect Bethesda's remaining employees to put in the extra effort needed to make the next Fallout and Elder Scrolls games smash hits?"

These layoffs are part of the 3,200 job cuts Xbox announced at the beginning of July, the fifth round of mass layoffs in three years. Union workers and supporters recently held "Save Our Devs" rallies outside studios including id Software and Obsidian Entertainment. OneBGS has also linked to an Xbox Player Voice feedback page encouraging people to tell Microsoft directly that the treatment is unacceptable.

I want to be careful about framing here. Layoffs can be legitimate business decisions, and I'm not going to pretend every company that restructures is acting in bad faith. But when you cut 40% of your unionised workforce in six months, promise remaining workers employment through September and then yank it eleven days later with minimum-legal-notice emails, and do all of this without the bargaining your own labour agreements require, the word "restructuring" starts to look like a euphemism. Canada's labour protections are strong enough that OneBGS may have real teeth in this fight, and the NLRB charge in the US adds a second front. Microsoft's legal exposure here could outlast whatever cost savings the layoffs were meant to deliver.