Elon Musk and his company X Corp have reportedly come to a preliminary agreement to resolve a lawsuit initiated by former Twitter employees who claimed they were entitled to $500m in severance payments.

In a court filing, legal representatives for both X Corp and the ex-employees requested a postponement of an upcoming court session in a US appeals court to allow time for the finalisation of the settlement, reported Reuters.

The settlement aims to compensate the dismissed workers and conclude the legal proceedings.

The specific financial details of the agreement have not been made public.

Following Musk’s acquisition of Twitter in 2022, which he subsequently rebranded as X, around 6,000 employees were terminated.

This led to several lawsuits regarding their dismissals and severance payments, with additional cases still active in courts located in Delaware and California.

The settlement pertains to a proposed class action initiated in California by Courtney McMillian, who previously managed Twitter’s employee benefits as the “head of total rewards,” alongside Ronald Cooper, an operations manager.

In July 2024, a federal judge in San Francisco dismissed the employees’ lawsuit, prompting them to appeal to the 9th US Court of Appeals, which was set to hear oral arguments on September 17.

Legal representatives for Musk and McMillian did not provide immediate comments, the report added.

The lawsuit contended that a severance plan established in 2019 assured most Twitter employees would receive two months of their base salary plus an additional week of pay for each full year of service if they were laid off.

Senior staff members, including McMillian, were entitled to six months of base pay, according to the claims made in the lawsuit.

However, the lawsuit alleged that Twitter provided laid-off employees with a maximum of one month of severance pay, with many receiving no compensation at all.

The company had reduced its workforce by more than 50% as part of cost-cutting efforts following Musk’s takeover.