Arcadia Group has agreed to pay the full salaries of head office staff facing redundancy, after backtracking on its initial plan to pay staff their furloughed salaries.
Arcadia, whose high street brands include Topman, Topshop and Dorothy Perkins, initially planned to pay head office staff 50% of their notice pay, rather than a full redundancy package.
The retail group, run by Sir Phillip Green, has now agreed to pay full salaries for head office staff facing redundancy.
It comes as Arcadia previously announced that it was cutting 500 jobs from its 2,500 strong head office workforce.
In a statement, Arcadia said: “We recently implemented a policy for those employees who are working their notice on furlough to receive their furlough pay instead of their full pay.
“We got this decision wrong and the board has today amended this policy to ensure all affected employees will receive their full pay.”
The group added: “We are extremely sorry to all those individuals [affected] for the distress that we have caused and apologise unreservedly.”
Britain’s largest union, Unite, hailed the U-turn as “an amazing victory”.
The union had previously threatened to take legal action for illegal deduction of earnings on behalf of more than 40 head office staff.
Unite regional officer, Debbie McSweeney, said: “We welcome this news that Arcadia has U-turned and has now promised to pay head office staff full pay during their notice period.
“We understand that it is almost without precedent for Arcadia to apologise for such behaviour towards employees – but this situation should have never been allowed to happen in the first place by Sir Philip Green, one of the country’s richest men.”
She added: “Unite would like to sincerely thank our members for the solidarity and personal courage they have shown in standing up to Arcadia’s management and playing their part in righting a flagrant pay injustice. It is an amazing victory.
“This puts down a strong marker to other employers who may be thinking of taking advantage of the government’s furlough scheme – Unite is on high alert for such cases and how they may adversely affect our members.”
She added that Unite will examine the Arcadia statement “in detail” before a decision is made to withdraw legal action.