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JD Wetherspoon refuses to pay suppliers until lockdown ends | Business

JD Wetherspoon has told its suppliers it will not pay them until pubs reopen after the coronavirus lockdown, in a move that risks adding to a backlash against its behaviour during the crisis.

The move comes after Tim Martin, the outspoken founder and chairman of the pubs chain, told its 43,000 staff that from Friday he could not afford to pay them during the crisis, pending the government finalising a “furlough” scheme under which the state would pay 80% of employee wages. JD Wetherspoon has 874 pubs.

What do the new restrictions involve?

People in the UK will only be allowed to leave their home for the following purposes:

  • Shopping for basic necessities, as infrequently as possible
  • One form of exercise a day – for example a run, walk, or cycle – alone or with members of your household
  • Any medical need, to provide care or to help a vulnerable person
  • Travelling to and from work, but only where this is absolutely necessary and cannot be done from home

Police will have the powers to enforce the rules, including through fines and dispersing gatherings. To ensure compliance with the instruction to stay at home, the government will:

  • Close all shops selling non-essential goods, including clothing and electronic stores and other premises including libraries, playgrounds and outdoor gyms, and places of worship
  • Stop all gatherings of more than two people in public – excluding people you live with
  • Stop all social events, including weddings, baptisms and other ceremonies, but excluding funerals

Parks will remain open for exercise, but gatherings will be dispersed.

Suppliers can contact the company to see if there are circumstances in which they can be paid but there is no guarantee that it will agree to do so, even if goods such as food and drink have already been delivered.

The controversial policy is likely to pile further pressure on suppliers, which have had their route to market cut off after the government ordered pubs, bars and restaurants closed.

In an email sent to suppliers, JD Wetherspoon said: “We are asking for a moratorium on payments, until the pubs reopen, at which point we intend to clear outstanding payments, within a short timeframe.”

The email, first published by the sustainability website Footprint, continued: “We understand that this puts significant pressure on our suppliers, but we are kindly asking for your assistance during this very difficult period.

“A number of our suppliers have already offered assistance and we would be most grateful for your cooperation as well.”

Coronavirus lockdown in the UK: the dos and don’ts – video explainer

The law allows suppliers to charge 8% statutory interest, on top of the Bank of England base rate, on payments that are made late.

Sean Upson, a partner at Stewarts law firm, said JD Wetherspoon could seek to use a “force majeure” clause to free itself of contractual obligations, citing events beyond its control.

But he said: “Force majeure is not a ‘get out of jail free’ card. There is no legal precedent for using it in this way.”

A spokesperson for JD Wetherspoon confirmed the letter to suppliers was genuine. The Guardian has asked Martin for comment.

The JD Wetherspoon chairman has repeatedly attracted controversy over issues such as Brexit and staff payments but has proved to be a particularly divisive figure during the Covid-19 pandemic.

He initially vowed to keep pubs open during the outbreak, playing down the danger of contagion , before they were ordered to shut by the government.

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