North East restaurant chain Tomahawk Steakhouse has been criticised after it asked furloughed staff to loan the company part of their wages to help it weather the pandemic.
The firm has written to employees who have been furloughed, asking them to sign voluntary agreements to contribute around 10% of their wages to cover their pension and National Insurance contributions.
Furloughed employees have 80% of wages covered by the Government Job Retention Scheme but other contributions still have to be met by employers.
Tomahawk Steakhouse - which started in Potto, North Yorkshire but now has restaurants in Newcastle, Jesmond, Ponteland and Durham and among others further afield - turned to staff for help, saying it had a “short-term cash flow issue and it requires your help and support”.
In the letter, seen by ChronicleLive, Tomahawk said the loans would have to remain in place for three to four months as restrictions on the hospitality trade continue.
The letter says: “The company is confident that there are great opportunities for growth and carer (sic) development for those who wish it and show the appropriate aptitude, but we need to get reopened after the end of this lockdown. We want all current employees to remain with the company as it is your enthusiasm and excellent customer service that has helped us to grow to the company we are today and will help us be bigger and better in the future.
“The company has supported you so far with placing you on furlough (where possible) so you still receive around 80% of your wages and in order that we can retain you in the company.
“Now we respectfully ask, in these difficult times, for you to support us by agreeing to pay your own Employer’s NIC/Pension Contributions by way of a voluntary “loan” to the company, whilst we are in lockdown.”
The letter adds that the loans would be repaid “once the lockdown is eased sufficiently” for the company to trade and would be repaid in a maximum of six instalments or possibly in fewer amounts.
The GMB union hit out at the approach, claiming the staff had been ‘bullied’ into signing the contracts or face losing their jobs.
Neil Derrick, GMB regional secretary, said: “This is an outrageous abuse of the furlough scheme and a legal loophole that must be closed.
“It’s never been easier for businesses to access cheap money, yet Tomahawk is bullying its own young, low-paid staff to raise interest free cash.
“This callous behaviour will leave waiters and waitresses, pot-washers and cooks short of cash and force them to take out interest rated loans to cover the shortfall or face losing their jobs.
“Tomahawk needs to take a long hard look at its behaviour – and this legal loophole must be closed before other companies follow suit.”
Tomahawk defended its actions, saying: “At no point has Tomahawk Steakhouse ever suggested that members of staff would be sacked if they did not sign a loan agreement.
“Like the rest of the hospitality industry, we have faced a challenging year, and our priority throughout has been 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 company posted the statement on each of its restaurants’ Facebook pages, adding: “We were trying to keep all 500 plus staff in a job not out of one like it has been reported.”