Tomahawk Steakhouse | Furloughed staff 'asked to loan firm 10%'

Furloughed staff 'asked to loan firm 10%'

The Coronavirus Job Retention Scheme (CJRS) has proven to be a lifeline for many businesses and its staff members in the UK during the coronavirus crisis.

Despite this, a union has claimed that a restaurant chain has asked furloughed staff members to loan the organisation part of their wages or potentially face the sack – the BBC reported.

According to the GMB Union, Tomawhawk Steakhouse – which has branches in York and Middlesbrough – wants employees to sign an agreement to lend one-tenth (ten per cent) of their wages to cover pension and national insurance contributions.

It has been claimed that those who refuse have been told that their “suitability for the role will have to be reviewed”. Yet, the restaurant chain has denied claims that staff were told they might lose their roles.

‘Short-term cash flow issue’

In a letter obtained by the BBC, Tomahawk Steakhouse said to staff it has a “short-term cash flow issue and it requires your help and support”.

From our premium content

The letter reportedly said that as it must make pension and national insurance payments itself the “only viable alternative is to ask for your agreement to a loan agreement”.

It has been reported that this interest-free loan will be repaid ‘once lockdown eases sufficiently enough for the company to trade’.

GMB’s regional secretary says ‘it stinks’

Speaking on this, Neil Derrick, GMB Regional Secretary, said: "It's never been easier or cheaper for businesses to borrow money than it is at the moment during the pandemic, but this business, Tomahawk, want it for free and they have solved their cash flow problem by giving a cash flow problem to their staff.

"It stinks and we think it is an abuse of the furlough scheme, we think it is an abuse of the job retention scheme and we've asked HMRC to investigate.

"Staff have been told that if they do not agree to the loan agreement their suitability for the role will have to be reviewed, and we all know what that means, that's a threat of dismissal,” Derrick added.

Tomahawk Steakhouse responds to claims

In response to this story, a spokesperson for Tomahawk Steakhouse told the Caterer: "At no point has Tomahawk Steakhouse suggested that members of staff would be sacked if they did not sign a loan agreement."

Read more from us

Much like the rest of the hospitality sector they said that they had faced a “challenging year” but insisted that the firm’s priority was “to protect our people and our business”.

“As part of this and in order to survive the coming months, we asked our staff to sign up to a voluntary agreement to help us cover the cost of employer NIC/pension amounts, in the form of a loan. Every single employee chose to sign up to this agreement,” the spokesperson added.

Legal expert weighs in

Following the circulation of this story, HR Grapevine spoke to Lucy Lewis, Partner at law firm Lewis Silkin.

The legal expert said: This appears to be trying to work-around the HMRC furlough eligibility condition that all sums are paid to the employee without deduction. 

“Given the broad scope for HMRC review, it is very likely to be seen as going against that criteria (particularly where it is a condition of being accepted for a role), and the risk is that it makes the furlough grant repayable.”

Given the negative publicity following this, Lewis said she thinks it is unlikely that other businesses would follow suit.

Lewis added: “HMRC is clearly live to this type of issue and has already commented on the support available to employers in financial distress whilst also encouraging employees to report employers who may be abusing the scheme. 

“A better course of action for employers is, therefore, to seek out the support available rather than put in place schemes which disadvantage their employees and which may amount to an abuse of the CJRS.

“It is illegal to recover employer NICs on cash earnings from employees so, depending on how the arrangement is structured, this may be another area of enquiry for HMRC,” the legal expert explained.

Use of the furlough scheme

Yet, this is not the first time that organisations have attracted negative media attention regarding the furlough scheme, which was launched by the Chancellor when the pandemic hit last year.

For example, last year it was alleged that some workers were being asked to contribute to furlough payments from their own wages.

Separately, data from academics at the universities of Oxford, Cambridge and Zurich found that two-thirds of UK staff placed on the furlough scheme continued to do their job during the lockdown period when they are not allowed to.

Elsewhere, several high-profile celebrities – including Victoria Beckham, Stella McCartney and more recently Charlotte Crosby – have come under fire for choosing to furlough staff, despite their own personal fortunes.

Have you enjoyed this piece?

Subscribe now to myGrapevine+ and get access to exclusive new content, and the full content archive.

Be the first to comment.

You are currently previewing this article.

This is the last preview available to you for 30 days.

To access more news, features, columns and opinions every day, create a free myGrapevine account.