Thousands of store staff at Marks & Spencer will see wages hiked by around 15 per cent, but workers will see extra pay for Sunday shifts axed under plans announced by the group.
The retailer also dealt a blow to 11,000 members of its final salary pension scheme as the group revealed proposals to close it to future service accrual, having already shut it to new policyholders in 2002.
All staff on the gold-plated pension are set to be moved to a defined contribution scheme, where returns are based on stock market performance, from next April.
M&S, which employs 70,000 store staff, said last month’s introduction of the national living wage prompted a review of wages, with plans to increase the base rate for qualified customer assistants to £8.50 an hour outside London and £9.65 for those in Greater London from next April.
It is also proposing to increase pay for coordinators and section managers.
But there was some mixed news for employees as the group announced changes to so-called premium payments for Sundays and unsociable hours, which will see it axe extra pay for Sunday shifts and introduce a flat rate for bank holidays.
It will also introduce a standard rate for shifts between 10pm and 6am, at £3 extra an hour for customer assistants.
New chief executive Steve Rowe, who took on the top job from Marc Bolland last month, said: “There are some people who will see a reduction in premium pay as a result of this, but the overall pay increase is pretty substantial.”
Customer assistants outside London will see pay rise from £7.41 to £8.50 – an increase of 14.7 per cent. Store staff in Greater London were previously on different bands. The chain is now consulting on the pay and pension changes.
M&S said the review would deliver a “fairer, simpler and more consistent approach to pay and pensions”.
“Our people will be among the highest paid in UK retail in terms of pay and benefits,” added Rowe.
The plans were revealed as the group posted a 4.3 per cent rise in underlying pre-tax profits to £689.6 million for the 53 weeks to 2 April.
But the group said a move to cut prices amid tough conditions on the high street would “have an adverse effect on profit in the short term”.
Rowe said his clothing overhaul will see the group reduce everyday prices and cut back on promotions and clearance sales, but it will remain focused on quality through “fabric, fit and finish”.
The group also plans to “re-establish our style authority”, with a focus on stylish wardrobe essentials to win back customers, and will reduce the number of product lines in its autumn/winter ranges.
As part of aims to improve its customer service, more staff will be put in store, in particular cafes and changing rooms.
The group admitted the turnaround of its clothing business “won’t happen overnight”, following a hefty 2.7 per cent slide in sales over the final quarter of its financial year.
Rowe said: “Our results last year were mixed. We continued to outperform on food but we underperformed on clothing and home sales.
“This is not satisfactory and today we are outlining our initial plans to address the issues and to position Marks & Spencer to deliver profitable sales growth.”
M&S said conditions remain challenging and signalled no immediate recovery in its clothing division as it said sales trends seen in the past financial year will continue.
On a bottom-line basis, pre-tax profits fell 18.5 per cent to £488.8m. A final dividend of 11.9p was proposed, lifting the full-year payout by 3.9 per cent to 18.7p a share.