The owner of John Lewis and Waitrose is considering cutting up to 11,000 staff jobs in the next five years, after the retail group slashed redundancy terms this week.
Sources said at least 10% of the staff-owned business’s 76,000-strong workforce could go across the group’s head office, supermarkets and department stores.
Department heads are working on plans and the number of roles in the business is expected to be gradually reduced over several years via redundancies and not replacing staff who leave, sources said.
John Lewis warned about potential job cuts in March last year as part of a plan to reduce costs and use technology to improve efficiency. The group has already cut thousands of jobs partly through store closures, including 16 department stores and several supermarkets, over the past few years.
One well-placed source said John Lewis executives had discussed cutting as many as 11,000 roles as part of its latest turnaround plan – amid rising pay and other costs and poor sales. Another said this figure had been briefed to select staff by some managers as the company battles to bounce back from a £230m full-year loss.
The scale of potential job cuts emerged after the John Lewis Partnership (JLP), which is owned by its staff via a trust, wrote to workers this week telling them it was cutting the terms of its redundancy package in half – offering one week of pay a year of service instead of two for anyone being made redundant from 1 February.
One member of staff, known as partners because of they co-own the business, said the announcement of a cut was particularly galling as it came shortly after a number of senior executives had left on the more generous deal.
JLP told staff it was making the change as the current package was “higher than typical market practice and comes at a very high cost”. It said it needed to “free up cash” with a “more affordable” policy.
The company offers the “partnership redundancy pay” package on top of statutory redundancy pay which is set by the government at one week a year of service for over 22s and 1.5 weeks for those over 41, capped at a maximum of just over £19,000.
In an internal memo issued on Thursday, first reported by the Telegraph, the John Lewis Partnership said: “Against all of our competing priorities for investment, it’s fair to say that the high cost of redundancy pay has been one of the things that’s prevented us from moving as quickly as we’ve wanted to transform ourselves for the future, and has restricted our ability to invest more in pay.”
It added that it was raising the minimum redundancy payment for those who did not qualify for the full partnership package from one week’s pay to four weeks to “better support those with shorter service who are affected by redundancy”.
The announcement prompted a flurry of furious posts on the group’s internal messaging board with one worker saying: “Another example of major changes being made which will affect partners without a dialogue with partners.”
Some called for an emergency meeting of the group’s partnership council, which gives the owner-workers a democratic voice via elected representatives from across the business.
One member of staff told the Guardian: “We are held up as a better way of doing business and this just sits uncomfortably particularly when you take into account the recent wave of leadership level [redundancies].”
A spokesperson for JLP said: “What we are doing is cost-neutral and it is a rebalancing because any saving on redundancy pay will be directly reinvested into partner pay.”
The news on cutting redundancy terms was sent out via an email and then posted on the company intranet with staff not informed of any discussion at the partnership council.
JLP said the issue had been put to the council and the group’s democratic processes had been followed but the meeting had not been livestreamed to staff.
