Tesco Ireland has decided not to pay its staff an annual bonus following the poor performance of its business here.
Last month, the British retailer reported a 6.3 per cent fall in Irish sales for the 12 months to the end of February, with full-year turnover dropping to €2.6 billion, its lowest level in nearly a decade.
The company, which is embroiled in a major accounting scandal related to the overstatement of half-year profits, blamed the decision on wider market conditions and the overall performance of its Irish business.
It is understood the decision will affect all 15,000 Irish staff except for a minority covered by historic collective agreements, which provide for a guaranteed bonus of 5 per cent.
Decline
The decision comes in the wake of news the group made a termination payment of £1.22 million (€1.7 million) to former chief executive
Philip Clarke
, who was sacked in September following several years of falling sales and declining market share.
According to its annual report, it paid new boss Dave Lewis £4.1 million (€5.7 million) in the six months since luring him from Unilever to revive the group's fortunes.
In a statement to The Irish Times, Tesco said: "Due to competitive market conditions and the performance of the Irish business, Tesco Ireland has made the decision to declare a 0 per cent share bonus to colleagues this year.
“The Tesco Ireland share bonus scheme provides colleagues with the opportunity to become a Tesco shareholder through a revenue approved scheme which allows colleagues to take their annual award in cash, shares or a mixture of both.”
It is unclear if staff in other jurisdictions, where sales have been falling, will also be denied bonuses.
“Tesco doesn’t have a uniform remuneration policy across its 12 markets. Tesco Ireland sets its remuneration policy for our Irish colleagues based on what’s right for the Irish market,” a spokeswoman said. Irish staff received an average of €250 via the share bonus scheme in 2014.
Last year, Tesco issued four profit warnings and admitted overstating profits by £263 million. The irregularity is being investigated by two regulatory authorities and the serious fraud office in Britain.
