Arcadia agrees to pay furloughed staff full notice pay

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Topshop and Dorothy Perkins owner Arcadia Group has agreed to pay full salaries to staff facing redundancy, after it emerged it was using the Coronavirus Job Retention Scheme to slash notice pay.

Last month it was reported that Sir Philip Green’s retail group was planning to make around 500 head office staff redundant, and those that had been furloughed would only receive redundancy payments and notice pay based on the 80% of pay they received while off work.

This meant some staff were only going to receive half of what they were contractually owed according to the Unite union, which had threatened to take legal action for illegal deduction of earnings on behalf of more than 40 head office staff.

Staff who were contractually owed more than statutory notice pay were allegedly told they would receive furlough pay until 31 October, when the CJRS ends, and would then need to return to work for the remainder of their notice period.

However, the retail group has admitted it “got this decision wrong” and has agreed to pay affected staff their full salaries.

It said in a statement: “Throughout this pandemic, the Arcadia Group and its board have looked to protect the welfare of its staff and customers in the best and safest way possible. Like all companies within the retail sector and beyond, many tough decisions have had to be made during these very exceptional circumstances, including the restructuring of our offices. During this process we have observed all the guidelines and legislation.

“We recently implemented a policy for those employees who are working their notice on furlough to receive their furlough pay instead of their full pay. We got this decision wrong and the board has today amended this policy to ensure all affected employees will receive their full pay. They will be notified of this decision immediately. We are extremely sorry to all those individuals impacted for the distress that we have caused and apologise unreservedly.”

In July, the government rushed through new legislation that requires organisations making furloughed employees redundant to pay those with more than two years continuous service redundancy and notice pay based on their usual rate – not the 80% of wages they received while on furlough.

Debbie McSweeney, regional officer at Unite, said it was “almost without precedent” for Arcadia to apologise for such behaviour towards employees.

“This situation should have never been allowed to happen in the first place by Sir Philip Green, one of the country’s richest men,” she said.

“This puts down a strong marker to other employers who may be thinking of taking advantage of the government’s furlough scheme – Unite is on high alert for such cases and how they may adversely affect our members.

“Unite will want to examine the Arcadia statement in detail before finally deciding to withdraw our legal action.”