Marks & Spencer’s move to reduce redundancy pay levels is poorly timed. It will do it no favours as it struggles to bounce back Dear oh dear, what is Marks & Spencer playing at? If it weren’t bad enough that its 68,000 employees must wake up each morning wondering if today’s the day it will be serving Scottish Lechmere Salmon & Lemon Mascarpone Terrine for the very last time, the company decides the time is right to announce a reduction in redundancy pay.

Apparently staff are “angry”. Surely not. After all, it’s not as if there are signs that M&S may be considering a reduction in headcount. Everything is tickety-boo on the high street isn’t it? Forget Mervyn King’s admission that the UK is facing “a difficult and painful economic adjustment”, and the British Chambers of Commerce’s warning we are entering a “technical recession”. These are not to be taken seriously by M&S staff, it seems. Nor is the announcement that M&S is bringing its next trading update forward a month, Sir Stuart’s acknowledgment of a “third tap on the brakes” and the shock profits warning last month. Instead, we discover, the high-street giant has just not looked at its redundancy policies since 2006 and happens to feel it is the right time to renew the offering. The move is certainly not an admission that redundancies are around the corner, it stresses. M&S intends to reduce redundancy pay for employees aged 41 and over from 3.75 weeks for each year of service to three weeks, for employees aged 22 to 40 from 2.5 weeks to two weeks, and for staff aged 21 and under from 1.25 weeks to one week. These amounts are still twice the statutory rate of redundancy pay and favourable compared with many rivals. But the timing could not be worse. Each and every employee will now be wondering when the axe is going to fall.

This is bad for two reasons. Firstly, it may give the unions who have been trying to achieve recognition at M&S an opportunity to recruit by cashing in on the insecurity of employees. Secondly, there is the effect on employee morale. During tough economic cycles businesses need to work even harder to get the best out of their staff and to retain the most talented. Employees understand that in bleak times difficult decisions have to be made. It’s how you treat them that makes all the difference. Do this well and, if there are redundancies, the company reputation remains intact. If M&S is to achieve redundancy pay changes it will be altering each and every employee’s terms and conditions in a detrimental way. What if each employee does not agree? The company will have to adopt a very risky strategy of forcing the changes on employees. This does not only have legal implications but will create an antagonistic employee relations climate. This is the last thing Sir Stuart will want. Poor morale equals poor productivity. The pressure on Rose will only intensify if sales slump further. 

Siân Harrington is editor, Human Resources