John Lewis Mulls Job Cuts for 11,000 Employees Following Reduction in Severance Benefits

The proprietor of John Lewis and Waitrose is contemplating a significant reduction in its workforce, potentially affecting up to 11,000 employees over the next five years. This decision comes in the wake of the retail conglomerate’s recent reduction in redundancy benefits.

According to insider sources, around 10% of the workforce, which totals 76,000 employees in the staff-owned enterprise, may face job cuts across various divisions, including the corporate headquarters, supermarkets, and department stores.

Department heads are currently formulating strategies, and the gradual reduction in the workforce is expected to occur through a combination of layoffs and not replacing employees who depart voluntarily over the span of several years.

John Lewis had previously cautioned about potential job reductions in March of the previous year as part of its cost-cutting and efficiency-enhancing efforts through technological advancements. The group had already eliminated numerous positions due in part to store closures, including the shutdown of 16 department stores and multiple supermarkets in recent years.

An informed insider revealed that discussions among John Lewis executives have revolved around the possibility of shedding as many as 11,000 jobs as part of their latest turnaround plan. This move is prompted by escalating labor costs, among other factors, and disappointing sales figures. Another source suggested that some managers had briefed select employees about this figure, as the company strives to recover from a £230 million loss in the previous fiscal year.

The magnitude of the potential job cuts became apparent after the John Lewis Partnership (JLP), which is owned by its employees through a trust, notified its workforce about a 50% reduction in redundancy benefits. Effective from February 1st, the revised package offers one week of pay per year of service instead of the previous two weeks.

Some employees, referred to as “partners” due to their co-ownership of the business, expressed frustration as this announcement followed shortly after several senior executives had left with more generous severance terms.

JLP justified the change by stating that the existing package was “higher than typical market practice and comes at a very high cost.” They asserted that freeing up cash and implementing a more cost-effective policy were necessary steps.

In addition to the government-mandated statutory redundancy pay, which stands at one week of pay per year of service for employees over 22 years of age and 1.5 weeks for those over 41, capped at slightly over £19,000, the company offers the “partnership redundancy pay” package.

In an internal memo circulated on Thursday, initially reported by the Telegraph, the John Lewis Partnership explained, “The high cost of redundancy pay has been one of the factors impeding our ability to transform ourselves for the future and invest more in pay.”

To assist those with shorter service affected by redundancy, JLP also announced an increase in the minimum redundancy payment for employees who do not qualify for the full partnership package, raising it from one week’s pay to four weeks.

This announcement triggered a wave of disgruntled messages on the company’s internal communication platform, with employees questioning the lack of dialogue regarding these major changes.

Some called for an emergency meeting of the group’s partnership council, which provides employee-owners with a democratic voice through elected representatives from various segments of the business.

One employee voiced their discomfort, saying, “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 clarified, “What we are doing is cost-neutral, and it is a rebalancing because any savings on redundancy pay will be directly reinvested into partner pay.”

The news of the revised redundancy terms was disseminated via email and posted on the company’s intranet, with no mention of discussion at the partnership council to inform the staff.

JLP asserted that the issue had been presented to the council, and all democratic processes within the group had been followed, although the meeting had not been livestreamed to the employees.