Marks & Spencer has become embroiled in a dispute over staff pay as it grapples with a sales slide in its clothing division.
Chief executive Steve Rowe told shareholders at yesterday's AGM that the retailer faces "tough decisions" in the coming months.
M&S is consulting staff over the axing of premium pay on Sundays, and cuts to the pay for bank holidays and for employees working anti-social hours. This potentially affects around 7,000 staff.
It also plans to reduce pension contributions, which would hit 11,000 employees.
"We have been contacted by many of our members in Marks and Spencer who are very concerned about the proposed big changes in their pay and pension, along with the threat of Autumn store closures. Particularly as the company are threatening to sack any staff who do not accept the contractual changes," said David Gill national officer for shopworkers' trade union Usdaw.
Documents seen by City A.M. show staff could face dismissal if they refuse to accept the changes.
A Q&A sheet sent to staff, which forms part of the consultation, said: "It would be disappointing if anyone were not to agree to the changes but in those circumstances the company would consider all available options.
"One option which the company would consider is following due process to take the technical step of terminating contracts of employment of those who do not agree and offering re-engagement on new contracts of employment which include the changes."
Siobhain McDonagh, Labour MP for Mitcham and Morden in Greater London, told City A.M. the pay changes are designed to limit the impact of the National Living Wage, which came in at the beginning of April.
Over one hundred members of staff have contacted McDonagh with their concerns about M&S' proposed pay cut.
"They feel it more keenly because it is Steve Rowe who has let them down," McDonagh said. "We're hoping they will think again. Long-standing, loyal staff are being hit the hardest."
Rowe said yesterday that plans to increase basic pay for 62,000 staff by 15 per cent next April will mean M&S is offering "some of the highest wages in retail", but the GMB trade union described this as "giving with one hand and taking away with the other".
A spokesperson for Marks & Spencer said: "We believe our proposed new approach to pay and pensions would reward our people in a fair and consistent way, simplify and modernise our business and help us attract and retain the best talent so we can continue to provide great service for our customers."