NEWS
02/03/2021 14:24 GMT

Steakhouse Chain With 'Cash Flow Issue' Asks Furloughed Staff To Lend It 10% Of Wages

Tomahawk Steakhouse has faced criticism for asking employees to help cover pension and national insurance contributions.

Tomahawk Steakhouse Facebook
Tomahawk Steakhouse

A restaurant chain has been criticised after asking its furloughed staff to lend it 10% of their wages to help with a “short-term cash flow issue”.

Tomahawk Steakhouse employees – who are currently on furlough – were sent a “voluntary loan” agreement to loan 10% of their monthly wages back to the firm to cover pension and national insurance contributions.

In the document, seen by HuffPost UK, the company claimed it had “a short-term cash flow issue and it now requires your help and support”.

“The company is confident that there are great opportunities for growth and [career] development for those who wish it and show the appropriate aptitude, but we need to get reopened after the end of this lockdown,” the letter reads.  

“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 goes on to say: “We anticipate three to four months of lockdown where we can’t reopen and so continue to have no income to help pay the above.

“We are confident that IF the employees support the company to cover the cost of the employer NIC/pension amounts, then this would be enough for the company to get through to the end of lockdown.”

Repayment of the loan would start to occur “once the lockdown is eased sufficiently for the company to trade” and in a maximum of six instalments paid each month, it said.

Labour MP for York Central Rachael Maskell criticised the company’s actions and on Monday tabled a written question asking whether it was the government’s policy that employers can ask staff to loan the company part of their furlough payment.

In response, Treasury minister Jesse Norman said employers are required to pay staff “all the Coronavirus Job Retention Scheme (CJRS) grant they receive from HMRC to cover 80% of wages”.

“The employer is still required to meet the employer’s National Insurance and pension contributions. Employers cannot enter into any transaction with the worker which reduces the wages below the amount claimed,” he added.

Union GMB claimed the loan was not voluntary and that staff were told their role would “have to be reviewed [...] if they do not agree” to it – an allegation denied by Tomahawk.

The restaurant group said “every single” member of staff chose to sign the loan agreement. 

In a statement, a spokesperson said: “At no point has Tomahawk Steakhouse 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.”

One Tomahawk Steakhouse employee told the BBC that staff were first informed about the proposal during the video call. 

“It made me very angry,” they said. “Everybody is already worried about money, but then to be taking more off us for the company when the company has just opened a new restaurant in London, surely they must have money behind them rather than just relying on staff to give them a loan.”

GMB regional secretary Neil Derrick criticised the company, saying: “This is an outrageous abuse of the furlough scheme and a legal loophole that must be closed.”

He added: “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.”

Last month, the restaurant chain announced it would be opening a new branch in Warrington, Cheshire, its first restaurant in the north-west of England. 

In December, the chain opened its first London store in a space formerly occupied by Jamie Oliver’s Fifteen restaurant in Hoxton, just months after opening a branch in York. 

“When it comes to venues and growing the business, Tomahawk is a company that pushes boundaries,” owner Howard Eggleston said following the London launch. “Expansion plans and potential site visits have not stopped even in the lockdown.

“We must keep our heads high and keep up momentum otherwise we stop, and we just accept that.”

Tomahawk also operates restaurants in Durham, Darlington, Beverley, Middlesbrough, Newcastle, Northumberland and across Yorkshire.