M&S to put senior staff on contracts

MARKS & SPENCER is introducing service contracts for its senior executives for the first time in a move that will make it cheaper for the struggling retailer to get rid of top level staff.

Board directors, divisional directors and senior executives will be placed on 12-month contracts from next April.

The company said the change would put the company in line with corporate governance best practice but admitted it would also cut redundancy payments.

Senior M&S managers have always worked without contracts in the past. When redundancies were made, senior staff were given discretionary payments depending on their age and length of service.

These pay-outs could be worth up to two years' salary or paid in the form of generous pension top-ups.

Director contracts were rarely an issue at M&S until recently as few were ever sacked.

But in the last year the company has axed six board directors and a quarter of its senior management.

Peter Salsbury, the group's beleaguered chief executive, is also understood to be considering a plan to cut a further 30 to 40 out of the remaining 90 divisional directors and executive directors in the next few months.

M&S tried to put a positive gloss on the changes. "What we are doing is to provide a more open, professional employment contract for the most senior positions. It provides security both for the company and for the individuals," an M&S spokeswoman said.

The changes affect 100 managers in total. They will have until the end of March to sign their new contracts.