Upwork layoffs reach 37% as restructuring expands

Upwork announced Thursday that it is expanding its existing restructuring plan, bringing the total workforce reduction to approximately 37%, according to HR Tech Feed. The newly disclosed cuts build upon and include a previously announced 24% workforce reduction at the online freelance marketplace.

The company now estimates total pre-tax restructuring charges under U.S. GAAP of between $27 million and $37 million, up from its earlier projection of $16 million to $23 million. Upwork has already recognized $18.1 million in restructuring charges through September 30, 2026, with remaining costs expected to be recorded over the next three quarters, the bulk hitting in Q4 2026. The charges consist primarily of severance packages and other one-time termination benefits. Upwork expects execution of the restructuring plan to be substantially complete in the first quarter of 2027.

What the expanded restructuring means

The jump from a 24% to a 37% workforce reduction signals that Upwork’s initial cost-cutting measures were not sufficient to meet its financial targets. The company is now taking a deeper cut across its operations, which means more employees will receive termination notices than originally planned.

For HR and payroll teams at other companies, this pattern is worth noting. A phased restructuring approach, where an initial reduction is later expanded, creates distinct administrative challenges. Employees who survived the first round may face a second round of uncertainty, and payroll teams must manage multiple waves of severance calculations, tax withholding adjustments, and benefits continuation timelines.

Payroll implications of phased layoffs

When a company expands a restructuring plan, payroll teams face a longer processing window than a single-event layoff. Upwork’s timeline shows charges recognized through September 30, 2026, with the bulk of remaining costs hitting in Q4 2026 and plan execution expected to be substantially complete in Q1 2027. That means severance payments will likely be spread across at least two fiscal quarters and possibly into a third.

Payroll professionals should note that severance payments made in different tax years can affect employees’ tax situations differently. A worker terminated in late 2026 may receive severance in 2026, while another terminated in early 2027 may receive payments in a different tax year. This can shift withholding calculations and year-end reporting requirements.

What HR teams can learn

Upwork’s restructuring charges of $18.1 million already recognized through September 30, 2026, against a total projected range of $27 million to $37 million suggests that a significant portion of the financial impact has already been absorbed. The remaining charges, concentrated in Q4 2026, indicate that the company is front-loading the cost recognition.

For HR leaders at other organizations, the key operational lesson is that restructuring plans should be built with flexibility in mind. A plan that starts at 24% and expands to 37% means that communication strategies, outplacement services, and internal resource allocation must be designed to scale. HR teams should also prepare for the possibility that initial retention offers or stay bonuses may need to be revisited if a second wave of cuts follows.

Timeline and next steps

The restructuring timeline spans several quarters. Upwork has already recognized $18.1 million in charges through September 30, 2026. The remaining costs, estimated between roughly $9 million and $19 million based on the projected range, will be recorded over the next three quarters, with the majority hitting in Q4 2026. Plan execution is expected to be substantially complete in Q1 2027.

This extended timeline means that Upwork’s HR and payroll teams will be managing severance administration, benefits continuation, and regulatory compliance across multiple quarters. Companies in similar situations should confirm their obligations under local employment laws, as notice periods, final pay deadlines, and benefits continuation rules vary by jurisdiction. In the U.S., federal WARN Act requirements may apply depending on the size and timing of the layoffs, and state-level mini-WARN laws often have different thresholds. In the UK, collective consultation requirements may apply for larger reductions. HR teams should verify the specific rules that apply to their own locations.

Financial reporting considerations

The revision in projected restructuring charges from $16 million to $23 million up to $27 million to $37 million represents a material change in Upwork’s financial outlook. For finance leads and HR managers at publicly traded companies, this highlights the importance of accurate initial estimates when announcing restructuring plans.

Under U.S. GAAP, restructuring charges must be recognized when the liability is incurred, which typically means when employees are notified and the severance terms are communicated. The fact that Upwork has already recognized $18.1 million through September 30, 2026, suggests that a substantial portion of the affected workforce has already been notified. The remaining charges will be recognized as additional employees are notified in subsequent quarters.

The expanded restructuring at Upwork reflects a broader trend of technology companies recalibrating their workforce levels in response to changing market conditions. For HR and payroll professionals, the key takeaway is that restructuring plans are not static documents. They can and do change, and the administrative systems that support them must be built to accommodate that reality.

Sources: HR Tech Feed

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