Innovative London law firm iLaw has said that the more than 70 senior executives at the John Lewis Partnership should get legal advice before their departure from the business.
The unique employment arrangements at the John Lewis Partnership, which is seeking to cut the roles from February next year, mean that any form of redundancy or remuneration needs to be considered carefully.
All employees at the Partnership, from the most senior managers down to those working on the shop floor, are known as partners under the company’s co-ownership model.
Each year they receive a form of bonus from shares that are held in trust for the benefit of employees. This bonus is a share of the company’s annual profits.
However, unlike shares issued by some businesses to senior executives as an incentive to remain in a business, the staff at the Partnership never actually own the shares that are held in trust and therefore they cannot be cashed in at the end of a person’s employment.
Julian Cox, Head of Employment at iLaw, said: “The John Lewis model of employment is often held high as a good example of employees co-owning a business and it has certainly worked for them for a long time.
“However, unlike some other co-ownership models, in which share arrangements allow employees to obtain shares and realise the value of those shares by selling them back to the market, either during or at the end of their employment, the John Lewis model offers no such flexibility.
“For those senior executives who have invested years of their career into the John Lewis Partnership the cuts will probably be very disappointing and they must be properly remunerated for their work within the organisation and given the best opportunity to move on.”
Julian said that employees should seek out expert legal advice from employment specialists with a strong understanding of the distinct partnership model at John Lewis to ensure they enjoyed the best outcome.
As part of the restructure, the management team at the John Lewis Partnership will be merged with that of the company’s grocery chain Waitrose to create a single team.
John Lewis hopes that the restructuring will help the Partnership save around £100 million. It comes after the world-renowned retailer announced a half-year loss for the first time in its history.
“Unfortunately, the John Lewis Partnership is not unique in facing a difficult time in the retail sector. High street sales are down and we are seeing an increasing number of big names go under, merge or take more of their business online,” added Julian.
“We are likely to see a period of restructuring within the sector, which may mean redundancies in future. Senior employees should seek advice before accepting any offers, as they may be in a stronger position to negotiate terms than they realise.”
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