Steve Hawkes, Retail Correspondent
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Marks & Spencer plans to slash the redundancy benefits for its 60,000 staff by up to 25 per cent in a move that has infuriated employees and triggered fears of a middle management cull.
In an internal memo seen by The Times, the high street retailer is proposing to reduce the maximum payout that employees can receive in relation to their length of service from 70 weeks to 52 weeks.
Anyone aged over 41 would receive only three weeks’ pay for each year they had worked at M&S if made redundant, compared with 3.75 weeks’ pay at present. M&S wants to introduce the new conditions by September 1.
Employee representatives have warned the M&S board that the proposed changes had caused “an unprecedented level of feedback, concern and anger”.
In a letter sent to management last week they added: “There is zero confidence that we will not be entering another round of redundancies, and a strong suspicion that this is one of the reasons behind the proposal.”
They claim that the cuts present a stark contrast to the £500,000 payout handed to Steven Esom, the M&S food director ousted last month after being judged as “not delivering”. One M&S employee said: “One wonders whether our talent for alienating customers is now being applied to staff.”
An M&S spokeswoman said that the new proposals put the group in line with other retailers but added that the new terms were still more favourable than most of its rivals. She insisted that there were no plans to cut jobs.
However, the GMB trade union, which was embroiled in a fierce row with M&S earlier this summer over the planned closure of a ready-meals factory, said that it feared a fresh round of lay-offs was inevitable. A GMB spokesman said: “These proposals tell me that there is going to be a lot of VERs [voluntary early retirements], a cull of middle management. To me it just indicates that M&S is desperate to save money.”
Retailers are under intense pressure to cut costs and it emerged at the weekend that Homebase, the DIY group, was planning to realign working patterns by changing shifts at one third of its stores.
M&S has been among the hardest hit by the fallout from the credit crunch on the high street. The retailer halved staff bonuses in May despite reporting pretax profits of £1 billion. Sir Stuart Rose, the executive chairman, blamed the tough trading environment. Analysts believe that pretax profits at M&S could fall to £700 million in the current financial year after a profit warning last month.
The proposed changes to the retailer’s redundancy benefits would still leave M&S staff with one of the best packages on the high street, and twice the level of the statutory payout.
In the memo, M&S claims that the new limit of three weeks’ pay for every year worked by anyone older than 41 matched that on offer at John Lewis, and beats Gap, the Coop, Next and the Arcadia group by some margin.
However, a typical employee aged 49 with 30 years of service would see their potential payoff fall by £9,000 to £26,000. Employees aged between 22 and 40 would receive two weeks for every year, down from 2.5 weeks.
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Quality has gone down at marks and Spencers in the last few years even the classic designs are now crap!!!
Employees at M & S should not moan about redundancies the packages are far better than the statutory legal amount. Also strop paying the fat cats at the top who have dragged M & S down
sue harnden, southampton, england
They are just lowering themselves to every other retailer just shows they dont respect their staff and they are just another number as far as they are concerned - I thought they set higher standards and were a cut above the rest - obviously not!
Kate, Cwbran, Wales
M&S closed its Canadian operations many years ago and few people have missed them. Personally I shopped mainly in the Food Section and mainly for nostalgic reasons(I'm an ex-Brit) and whenever thename M&S is mentioned among my contemporaries the response is usually about missing their Baked Beans.
Harriet Green, West Vancouver,BC, , Canada
This sounds just like Thomson Holidays, just after they announced their reduction in redundancy payouts from an unofficial 1 month to 1.5 weeks for anyone less than 40, they made big layoffs. GB's labour laws are a soft touch compared to some other countries, Germany for example.
Mark Smith, London, England.
They're being flexible - like their clothes they have found that one size doesn't fit all... or anyone very well..
Ed, Coventry, UK
The same terms and conditions should apply to the Managing Director down. There should not be one pay out and benefits for senior management and another for staff. M&S changed their redundancy package in 2005 saying that it was because of age discrimination and reduced the package to older staff.
Maggie, London,
British made clothing ?. M&S were the biggest destroyers of the clothing industry in britain when they switched production to India.
Alex, Darlington.,
The problem with M&S, as with many other UK retailers, is that its operating costs are rising fast largely because it is expanding its store space in a downturn, while cannibalising its high street sales by selling online. It is the economics of the madhouse.
Robert C, London, UK
They are still very generous redundancy payments. Very much more than those available to me and the majority of people. However as has been pointed out the severance packages available to senior execs both at M and S and most other large companies continue to be indecently inflated.
Bob Wiltshire, Alnwick, NORTHUMBERLAND
i work in retail and over the last few years theres have been several restructures resulting in redundancy options......i might add not as lucrative as the M&S offer......statuatory payout is much less that the M&S offer.....stop moaning, all those previous years bonus payouts more than compensate
jc, liverpool, uk
Its not greedy to expect the level of benefit you have been promised when signing a contract.
And I think that the outcry is more to do with the fact that this implies mass redundancy is expected.
The last cull is still in the fresh in the memories of most M&S employees
Boo, London,
M& S has lost it for the time being. The crazy notion of charging for bags stops passing trade (certainly me) and probably encourages shop lifting. Hitting the staff tells me the green experiment has failed - time to get back to basics - look after staff who look after customers etc - John Lewis?
g shepherd, chelmsford, UK
When Sir Phillip Green bought Arcadia he quietly tore up the employment terms and reduced redundancy to one week per year!
Just why did this tax evading market trader get a knighthood?
Arcadia now has the worst terms and conditions of any major retail group - Wal Mart eat your heart out.
Michael , Rugby,
I can only envy their REDUCED redundancy payouts.
It's no fun being made redundant on the Government statutory payments, after your company has been mis-managed into oblivion !
Obviously, the Director's got their money out before this happened.
cap, Lincoln, UK
If the same "benefits" were applied to top management the pay outs would perhaps be received with less opposition.
Another reason why it is time to put an end to the millions pocketed by boardroom directors each time they leave office regardless of their performance.
peterfieldman, paris, france
>>and twice the level of the statutory payout
That is a very wrong statement, statutory payout only pays up to a maximum of £330 per week, with limits on the number of weeks. The result is that for your example the payout would be just £7,920.
Roger, London,
"The proposed changes would still leave M&S staff with twice the level of the statutory payout;" - so what's wrong with cutting it down to the statutory payout level? That's what many of their customers have ever got!
Rita, Mulhouse, France
My wife is a shopper at M&S. I say bring the prices down
ASAP - but for some reason they will not and are entenched in the price mind set of the past !!!!!
ian payne, walsall,
The only thing you used to get was your cards. Maybe if they had to pay the employer if they left for another job they would not be so greedy. 1-year is more than enough.
Frederick, London, UK
Profits of over £1b!!
Where were the demands for a windfall tax on them or the protests for cheaper pants?
Paul, Camberley,
They're lucky to get ANY redundancy pay. M&S' real competition is not even in the UK: it's WORLDWIDE. And most of the real world doesn't shop in expensive department stores, wear British-made clothing or willingly fund Rolls-Royce golden parachutes when they do their shopping...
Chris. Fulker, Jiji Township, Nantou County, Taiwan