Canadian e-commerce giant Shopify laid off 20 per cent of its workforce earlier this month. Those terminated employees have filed a $130 million class action lawsuit against the company.

In a letter published on May 4, Shopify CEO Tobias Lütke said the layoffs were being carried out to "pay unshared attention to [Shopify's] mission."

"There are a number of consequences to this, and I don't want to bury the lede: after today, Shopify will be smaller by about 20 per cent, and Flexport will buy Shopify Logistics; this means some of you will leave Shopify today," he wrote. "I recognize the crushing impact this decision has on some of you and did not make this decision lightly."

Shopify offered the terminated employees severance packages. However, the laid-off group now alleges that the employer tried to slash their severance packages once they accepted the deal.

"Shopify advised employees that, despite accepting a severance package, the company would not honour the agreed-upon terms," reads a statement on Samfiru's legal website. "The company then presented outgoing staff with a second severance offer, substantially reducing the agreed-upon severance amounts, often by tens of thousands of dollars."

"In my over two decades as an employment lawyer, I have never witnessed an employer renege on accepted severance agreements in this manner, particularly during times of economic uncertainty," he said. "Shopify's conduct not only breaches the contracts it established with its employees, but it also demonstrates a disregard for fairness."

The class action is led by Iain Russell, who worked at Shopify for seven years.

According to lawyer statements, Russell accepted his severance package but was later instructed to "agree to a second offer with a potential reduction of more than $50,000."

Samfiru says the company threatened its employees with a "short and arbitrary" acceptance deadline for the severance packages and gave them no choice but to accept a much lower amount.

"It appears that Shopify took deliberate action to minimize its financial liability, resulting in considerable losses for potentially thousands of people," he added.