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Business News

M&S aims to cut maximum redundancy payout

Retail giant Marks & Spencer today confirmed plans to cut back redundancy benefits for its 70,000 UK staff.

The firm is in consultation with staff representatives on its Business Involvement Group over the move, which would limit maximum payouts from 70 weeks to 52 weeks depending on length of service.

M&S, which issued a shock profit warning in June, wants to introduce the changes by the beginning of September.

A spokeswoman said M&S had not reviewed redundancy benefits since 2006 and its new terms would still be more generous than most competitors.

But the move will heighten fears over job cuts as the group feels the brunt of a consumer spending squeeze, although the spokeswoman did not comment on possible redundancies.

According to the Times, which has seen an internal memo outlining the proposed changes, a typical 49-year-old employee with 30 years of service would see their possible pay-off fall from £35,000 to £26,000.

Those aged over 41 would get three weeks' pay per year worked instead of the current 3.75, while staff aged between 22 and 40 would receive two weeks instead of 2.5, the newspaper added.

The GMB union contrasted the proposed changes with the £500,000 handed to Steven Esom, M&S's former director of food, who left in July as shoppers shunned its dearer premium end goods.

Paul Kenny, the GMB's general secretary, said: "We are fearful that job cuts are on the way at M&S. Why else would they cut their existing policy if they did not intend to use it?

"Why do people at the bottom get the sack on the cheap while the top bosses get large payouts even when they leave having messed up?"

In May, M&S posted profits of £1 billion for the first time in a decade but slashed staff bonuses to £16.8 million - a fraction of the record £91 million windfall awarded a year earlier - after missing internal targets.

Last month executive chairman Sir Stuart Rose said consumer confidence had "deteriorated markedly" between April and June as shoppers came under pressure from soaring petrol, food and energy bills. This left UK like-for-like sales 5.3% lower in the 13 weeks to June 28.

Sir Stuart also received a broadside from shareholders over his controversial dual role as chief executive and chairman at the firm's annual meeting a week later.