Philips will initiate dismissal of 4,000 employees over due process decisions related to medical device production errors. The company will have to pay compensation of 1,300 million euros, which will have a significant impact on the balance sheet for the third quarter.

The group said the layoffs, which represent 5% of the workforce, would have immediate effects on its global network, in an effort to save around 300 million euros a year, the Financial Times revealed.

Philips has been forced to withdraw from the market and demand the return of 5.5 million ventilators to people with obstructive sleep apnea in the United States. According to the FDA, this puts users at risk by inhaling the toxic foam, which contributes to “a wide range of infections, including cancer, pneumonia, asthma and other respiratory problems, infection, headache, cough, difficulty breathing, dizziness, lumps, and chest pain.” .

The controversy forced the departure of CEO Frans van Houten, who led Philips’ recent shift to healthcare technology. New CEO Roy Jacobs said the decision on job cuts was not taken “lightly”.

“My immediate priority is … improving implementation so that we can begin to rebuild trust with patients, consumers, customers, as well as shareholders.” Jacobs also said that Philips is taking steps to “improve patient safety and quality management.”