Sam Smith's: bank forced us to cut staff

Family brewer Sam Smith's says it was forced to introduce a swingeing round of cuts to pub staff hours to reduce costs following financial pressure from its bank, an employment tribunal heard yesterday.

Brewery director Humphrey Smith said the company had been struggling to meet its bank covenants and was having difficulty renewing its overdraft when the reduction in staff hours was made last year.

The brewery, based in Tadcaster, North Yorkshire, is being sued for unfair dismissal by 18 former managers at nine different pubs who were sacked for refusing to implement the cuts.

The managers were told to reduce hours in a major cost-cutting exercise mounted by the brewery early in 2008 across its national managed pub estate.

Smith told the Sheffield tribunal: "We were under great pressure from the bank.

"We were having great difficulty renewing our overdraft and this commercial pressure was something we could not avoid," he said.

He told the hearing all managers had been told to cut staff hours down to 45 per week which he considered reasonable enough.

"We thought 45 hours was perfectly reasonable but they (the managers) refused to compromise," he added.

He told the tribunal that he had studied the cost structure of other pub chains and considered his own pubs could run efficiently on the same staff working hours system.

Former managers at the company's Holly Bush pub at Edenthorpe, Doncaster, Frank and Pam Marshall, are leading the action against the company in a test case hearing.

Smith said that at the start of 2008 profits were down 33% at the pub and staff wages accounted for 14% of the business net "take".

"This was unsustainable and put the future of the Holly Bush in jeapourdy," he said.

He said the brewery had held its beer prices since 1990, mainly by increasing its productivity as the price of beer was crucial to the success of its pubs.

He considered cheap prices gave his pubs a good opportunity to maintain their trade.

"We want this business to be around in 200 years time so we want to hold up our barrelage and maintain employment within the brewery," he explained.

Smith said he wanted his managers to increase their own productivity in difficult trading times but said many shunned new practices and adopted an "I'm All Right Jack" attitude.

The hearing continues.