The owner of Topshop and Topman has been accused of potential breaching employment law by offering staff being made redundant less favourable terms for their notice periods, linked to the government’s furlough scheme.
Sir Philip Green’s struggling Arcadia Group, which also owns Miss Selfridge, Evans, Wallis, Burton and Dorothy Perkins, is making up to 500 head office staff redundant after a slowdown in trade during the pandemic.
While some of those workers will receive full notice pay, furloughed workers who are contractually owed more than the government’s statutory minimum have been told that their payments will be based on the 80% of pay they received while on the job protection scheme.
Statutory notice pay is equivalent to one week’s pay for staff with less than two years’ service, and a further one week’s pay for every year worked after that, up to a total of 12 weeks’ pay.
One group of Arcadia staff who are contractually owed more than 12 weeks’ notice pay have been told that they will receive furlough rates of pay until 31 October and then must come back into the office to work the last weeks of their notice period.
One member of staff who is being made redundant said: “There are some really upset people who have worked at Arcadia for decades. They are not being treated well at all.” She said exit payments were also being forced down by workers on furlough being told to take at least a week’s holiday so that they would be owed less holiday pay when they left.
Arcadia’s plans come weeks after the government rushed through legislation intended to prevent companies from using furlough rates of pay as the basis for redundancy settlements.
A spokesman for the Department for Business, Energy and Industrial Strategy (BEIS) said: “We urge businesses to do right by their employees and pay staff what they are rightly entitled to. Those who do not could find themselves in front of an employment tribunal.”
Arcadia’s proposals are subject to consultation until 26 August, but the group stage of the process has passed, meaning workers wishing to challenge the company’s stance would have to hire their own lawyers.
In a letter to workers seen by the Guardian, Arcadia acknowledged there were “differing views in the circumstances” on basing notice pay on furlough rates, but said that based on the latest guidance and its own legal advice, it was confident it was acting lawfully, fairly and reasonably.
The company claimed that several other retailers were proposing to pay furlough rates of pay to employees being made redundant. However, the Guardian understands that major retailers currently making redundancies including M&S, Boots, Debenhams, WH Smith, Dixons and John Lewis are all offering redundancy packages based on full rates of pay.
A spokesman for Arcadia said: “The restructuring of our head office which we announced on 1 July is essential to ensure we can operate as efficiently as possible during these very challenging times. We remain in a consultation process with our head office staff and no decisions will be made until this process has concluded. Throughout this process we will be following all of the government guidelines and legislation. We are listening closely to all of their concerns throughout this process in what we know is a very difficult time.”
Michael Newman, an employment law expert at Leigh Day, said he thought the terms Arcadia had offered to some staff were “open to legal challenge”.
He said: “The indication from the government is clear – that redundancy payments should be based on pre-furlough pay. Furlough is just a grant giving a company money if you reach certain conditions. None of that changes the notice and redundancy payments, which are set in law and based on a normal week’s pay as set out in your contract.”
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