The famous British retailer Marks and Spencer is planning to axe 500 jobs from its London head office, according to reports.

The news follows an announcement on Friday (September 2) that 69,000 of its employees will see a 15% pay. The company claimed the move would make its employees "amongst the highest paid in UK retail".

The cuts will affect 15% of the roles at Marks and Spencer's headquarters in Paddington, London, with more than half of the cuts affecting contractors.

Sources told Sky News that the cuts are likely to be officially announced on September 15, following a period of consultation.

In July, the company announced the worst decline in its clothing business for more than a decade, with sales down nearly 9%.

Shop-floor roles will not be hit by the reduction in jobs. However, long-serving shop staff say their new pay deal could cost them thousands of pounds, after M&S removed premiums for working Sundays and antisocial hours, trimmed bank holiday payments and changed pension payments.

Siobhain McDonagh MP, who lobbied for M&S staff to receive higher pay, said 2,700 workers would lose more than £1,000 a year and 700 would lose more than £2,000.

How M&S's new basic wage compares

Pay sourceHourly rate
Living Wage£8.50
London Living Wage£9.40
Paid by employers who agree to
the Living Wage Foundation's principles.
National Living Wage£7.20
Legal minimum hourly wage for over-25s.
Minimum Wage£6.70
Legal minimum hourly wage for
16-25 year-olds.

The retailer said it was making the changes to help pay for a 15% increase in basic pay for its 69,000 workers from April to £8.50 an hour.

Sacha Berendji, M&S's retail director, told The Guardian: "We've listened to our colleagues, acted on their feedback and are pleased that we've reached an outcome that gives enhanced support for our colleagues as well as making necessary changes to our business.

"From April 2017 our people will be among the highest paid in UK retail and receive one of the best benefits packages. The changes will reward our people in a fair and consistent way, simplify and modernise our business and help us attract and retain the best talent."