Sir Philip Green’s retail empire is taking advantage of furlough rules to reduce staff pay while still taking tens of millions in government handouts, leaked documents reportedly show.
Staff at Arcadia Group were told by an executive that they had to take ‘every penny we can get’ from the public purse, reports say.
Arcadia made 300 staff at its head office redundant and paid then reduced rates for their notice period through a loophole in the government rules, it was said.
Those made redundant will be paid at reduced rates – some as little as half – during their notice period due to a loophole in government rules, The Times reports.
The company, which owns fashion brand Topshop, accepted tens of millions of pounds to pay furloughed staff – and has indicated that it wishes to take another £3 million from £1,000-a-head retention grants in January.
Internal minutes from meetings that took place amid the redundancy process are said to indicate that a representative of the company, Paul Forrest, told employees that he did not ‘dispute with you what you are saying about how this seems unfair and the ethics of this’.
He reportedly said that the company was ‘complying with minimum obligations provided by the law. It can’t afford any more.’
Sir Philip Green’s retail empire is taking advantage of furlough rules to reduce staff pay while still taking government handouts, leaked documents reportedly show
Arcadia Group now faces a legal challenge from the Unite trade union, who said: ‘Arcadia has taken the taxpayer-funded furlough cash during the pandemic, but now is using it as a shoddy smokescreen to slash notice pay.’
An employee involved in the process said: ‘Even by the standards of Philip Green’s Arcadia this has been shocking. The idea that they would get rid of us and not even honour our contracts in a time of financial crisis is just morally and ethically bankrupt.’
Another said the decision makes it seem like ‘they have no respect for anyone’.
Shadow business and consumers minister Lucy Powell said the move was a ‘disgraceful decision which suggests Arcadia is operating as a cowboy company’, and said ministers should ‘call this behaviour out and urgently intervene’.
Liberal Democray Treasury spokesperson Christine Jardine said that the idea of companies using the furlough scheme to ‘slash the cost of dismissing staff is not only against the spirit of the scheme but it is utterly reprehensible’.
Following concerns that companies could exploit the furlough scheme to reduce the cost of getting rid of employees, the government changed the law in July to compel companies to pay full salaries to those on statutory notice period.
The rule does not apply for companies with a longer contractual notice period – which is the situation for much of Arcadia’s employees.
The company, which owns fashion brand Topshop, accepted tens of millions of pounds to pay furloughed staff – and has indicated that it wishes to take another £3 million from £1,000-a-head retention grants in January, reports say
The Times reports that, following questions about the process, Arcadia Group told staff or a partial U-turn, meaning those with a 12-week notice period who will not return to work will get full pay from November 1 until their notice period ends.
It did not reverse the decision to reduce pay until that time, the paper reported.
Staff had questioned in internal meetings why senior executives, who have been receiving full pay since July, would not take a 10 per cent pay cut in order to soften the blow for employees on notice.
An Arcadia Group spokesperson said the company’s actions in response to the coronavirus crisis were ‘no different from most other retailers’ in Britain, and restructuring their head office was essential to making sure they can still operate.
The spokesperson added that they had worked hard to make sure there were as few job losses as possible – and they had been sticking to government guidelines and legislation.