The Red Devils announced a further 100 job cuts in February.
It is the second time in as many years that the club have looked to make staff redundant, with 450 redundancies being made all told, as they attempt to reduce costs.
United explained at the time that the move was part of an aim to 'return the club to profitability'.
Butt, who played for Man United's first team for 12 years, was asked about the redundancies whilst speaking to talkSPORT on Wednesday morning.
Joining Jim White, Alex Crook and Troy Deeney at the Cheltenham Festival, he explained: "I do get that people needed to get made redundant, but what gets me is the ones that got made redundant on peanuts, who love the football club.
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"For example, two of the girls got made redundant after 17 years there, on that day.
"And then three days later, they're volunteering to help do Kath Phipps' funeral, who was a receptionist for 30, 40 years. They were helping do Denis Law's funeral.
"So they love the football club, it's not about the money for them. So when you release people like that and make them redundant, they're the ones that really hit it.
"Not people that are on £500,000, £600,000 a year, because they get paid off. People that are on £20,000, £30,000 a year, that's the one that gets us."
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Kath Phipps had worked at United for over 55 years prior to her death aged 85 in December.
She had held several different roles during her time working for the club dating back to the late 1960s.
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Butt will have crossed paths with the beloved former United employee after coming through the club's academy.
Having broken into the first-team as part of the Class of '92, the midfielder remained with the Red Devils for another 12 years.
Prior to his exit in 2004, Butt scored 26 goals in 387 appearances under Sir Alex Ferguson.
He also won 17 trophies, including eight league titles and the treble in 1999.
Meanwhile, legendary striker Denis Law passed away aged 84 in January.
During 11 years at Old Trafford, the Scottish forward scored 237 goals in 405 appearances for the club.
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Law, who is a Ballon d'Or winner, also won two league titles, the European Cup and the FA Cup with United.
Law's legacy at the club is immortalised in the United Trinity statue outside Old Trafford, which also depicts George Best and Sir Bobby Charlton.