Primark rejects £30m coronavirus job retention bonus

Fashion retailer Primark, an Associated British Foods (LON:ABF) subsidiary, has turned down a £30 million offer from the UK government for bringing back its 30,000-strong furloughed workforce.

The high street clothing chain stated that it “should not be necessary” to take the government up on its offer, which includes a £1,000 bonus for each employee that companies bring back from furlough.

The initiative was designed to offset the “tragic projections” for unemployment expected this autumn when the government’s furlough scheme comes to an end in October.

Since swathes of Primark stores reopened in mid-June, all staff have returned to work, with the company expecting to generate a modest profit by the end of the year – although significantly less than usual.

An Associated British Foods spokesperson stated:

“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”.

Although losing around £800 million in sales since the lockdown began in March, Primark has remarked that reopening profits across its 375 UK stores have been largely encouraging. Photographs of lengthy queues outside Primark stores when they first reopened were featured across the front of national newspapers.

Without the support from the government’s furlough scheme, Primark has admitted that as many as 68,000 of its employees in the UK and Europe may have had to be laid off. The company was one of dozens of high street chains that struggled to stay afloat during the peak of the pandemic, with stores shut nationwide and trade essentially paralysed.

A source close to Primark commented on the company’s decision to turn down the £30 million bonus, saying:

“The stores are open, they’re trading, cash is coming in, if you don’t need the money why take it? But those circumstances don’t apply to other retailers or other industries”.

Other high street brands have been weighing up their options, with M&S (LON:MKS) “welcoming” the government’s ongoing support for businesses, although the company has not yet confirmed if they will be taking up the furlough scheme bonus.

Fast food giant McDonald’s (NYSE:MCD) has not yet commented as it is “still working through the details of the chancellor’s announcement”.

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Bronte Carvalho
Junior Journalist at the UK Investor Magazine. Focuses primarily on finance and business content. Has personal interests in Middle Eastern politics, human rights issues, and sustainability initiatives.