John Lewis Partnership is to halve redundancy payouts, leaving employees concerned about a potential round of job cuts.
Employees will now receive one week's pay per year of service instead of two weeks on top of statutory redundancy pay, which is set by the government.
The staff-owned company argued it is a necessary step to align its practices with the broader market and manage its expenses more effectively.
John Lewis Partnership said in an internal memo to staff: “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… and has restricted our ability to invest more in pay.”
However, staff, on internal forums, argued it was a “loud and clear” sign that job cuts were coming, with some claiming it was a “total betrayal of our core values” and proof that “redundancies are on the horizon”.
Last year, John Lewis signalled the possibility of job cuts as part of its wider turnaround plan, which was delayed by an extra two years in September.
Under pressure to return to profitability, the retailer undertook cost-cutting measures, including a £900 million reduction in expenses.
Last week, John Lewis confirmed it would provide managers with the power to limit staff pay rises after warning workers to expect smaller increases.
In both 2020 and 2022, the company was forced to cancel its bonus scheme for the first time in the company’s history.