Primark rejects British government’s bonus for calling furloughed employees back to work

The British government has been committed to incentivising businesses into calling their employees back to work after placing them on furlough in recent months due to COVID-19. In an announcement last week, Chancellor Rishi Sunak offered a bonus of £1,000 to the UK-based companies for each worker that they brought back on the payroll.

Shares of Primark’s parent organisation, Associated British Foods (LON: ABF), jumped more than 1% on market open on Monday but gave up the gain in the next hour. The £15.27 billion company is roughly 20% down year to date in the stock market. Learn more about how to invest in the stock market.

Primark saw a £650 million hit to its net sales per month

Primark placed a total of 30K employees on the state-backed COVID-19 jobs retention scheme. As the government started to ease Coronavirus restrictions in late May, however, the company recalled its entire workforce. The fashion retailer highlighted on Sunday that it will no longer be demanding payment from the government.

According to a spokesperson for AB Foods:

“The company removed its employees from government employment support schemes in the UK and Europe in line with the reopening of the majority of its stores. The company believes it should not be necessary therefore to apply for payment under the bonus scheme on current circumstances.”

Primark resorted to temporarily shutting down its entire network of retail stores in March to help minimise the fast spread of the novel flu-like virus. The move resulted in a £650 million hit to its net sales per month. The retailer, however, expressed confidence that sales were now recovering quickly in the first week of July.

Quiz suspends business with a supplier over wage allegations

Primark also expressed gratitude for the financial support from the government in recent months that enabled it to make payments to the staff that it furloughed. Without the state support, it commented, it would have been challenging to avoid aggressive job cuts.

The Coronavirus pandemic that has so far infected a little under 300,000 people in the United Kingdom and caused over 44,500 deaths saw British employers placing 9 million employees on furlough to date. The bonus scheme announced on Wednesday, therefore, is expected to cost roughly £9 billion if it succeeds in bringing all of the furloughed employees back to work.  

In separate news, the British fashion retailer Quiz said that it will no longer be working with the supplier that was recently accused in a media report of breaching the legal minimum wage requirements.