Arcadia in redundancy terms row

By

Sandra Halliday

Published
Aug 25, 2020

Arcadia could allegedly be in breach of employment law as staff facing redundancy are being offered less favourable terms based on the pay received during the furlough period rather than the regular pay they were receiving before this.

The owner of Topshop, Dorothy Perkins and Burton is shedding up to 500 jobs from its head office and a report in The Guardian said that some of them will receive full pay for their notice period but other furloughed workers could see the payments based on the money they received during lockdown. 

Furloughed staff were paid 80% of their regular salary by the government up to a maximum of £2,500 a month. 

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The UK government has already put through legislation that’s designed to prevent companies that are shedding jobs using furlough pay rates as the basis for redundancy payouts. And it said that those who contravene this could face an employment tribunal.

However, the company told The Guardian that it has taken legal advice and is confident that it’s acting lawfully, fairly and reasonably. It also said that other retailers are taking a similar approach.

The Arcadia spokesman added: “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.”

But Michael Newman, an employment law expert at Leigh Day, told the newspaper he thought the terms Arcadia had offered to some staff were “open to legal challenge”.

“The indication from the government is clear – that redundancy payments should be based on pre-furlough pay,” he said. “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.”