Decision comes after an outcry from workers when all 60 UK stores were permanently closed

Cath Kidston has agreed to hand over three weeks of back pay owed to staff, after outcry over the treatment of more than 900 workers left struggling for cash by being made redundant less than a week before pay day.

Just over 900 people who were made redundant on Tuesday, with immediate effect, were told they would not be paid more than three weeks of salary due on Friday. An email to staff made clear they would also not receive any holiday pay, redundancy pay or compensatory notice settlement because of “the company’s current financial position”.

But late on Wednesday, the Cath Kidston chief executive, Melinda Paraie, wrote to those who had been made redundant telling them of a change of heart. She said staff would be paid for the period between 1 April and 20 April. She said hundreds of staff who had previously been notified of being furloughed before being made redundant on Tuesday would receive 80% of their usual salary up to a £2,500 cap.

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She said: “I apologise for the delay in being able to share this information with you, and the anguish that this has caused. I can assure you that there has been a lot of work behind the scenes to ensure that these critical payments can be made to you.”

Paraie said that payments would not be made as usual on 24 April, but were expected to be paid by 30 April.

The U-turn comes after an outcry from workers after the vintage-inspired British brand, and its online operation, was sold by administrators on Tuesday to its Hong Kong-based owner, Baring Private Equity Asia. The deal saved just 32 jobs while all 60 UK stores were permanently closed.

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The company warned it was set to call in administrators earlier this month after Baring failed to find a buyer for the brand.

Workers were told in a conference call on Tuesday that they would have to apply to the government-backed Redundancy Payments Service (RPS), which can take up to six weeks to process payments, to claim the unpaid wages and other entitlements.

Even after Baring agreed to cover three weeks of back pay, workers will have to turn to the RPS to recoup lost holiday pay and redundancy payments, with many losing out as the scheme caps each element of the claim at £538 a week.

One newly redundant member of Cath Kidston’s workforce told the Guardian her colleagues were in shock after being told in late March that they would be furloughed under the government’s job-protection scheme.

“It was brutal. I came home and sobbed as I had no idea what would happen. I rent my property so I can’t get a mortgage holiday.”

Another former staff member said she was still angry, despite the back pay offer, because Baring and the administrators at Alvarez & Marsal had not opted to keep store staff on under the furlough scheme until the end of June as initially promised – a move that would have given the brand’s staff more time to find work.

“Baring is a huge company which has just decided to drop us now. This has come at a really stressful time … all they thought about was their money,” the worker said. “None of the staff can actually look for anything else [in terms of work in fashion retail]. All the brands are closed.”

One mother of an employee said her daughter had lost out on thousands of pounds of contractually owed payments and that the three-week back pay offer did not come close to covering the full amount owed.

She said: “There is lack of compassion and integrity over due process and even reasonable consideration. Most of the [office] staff made redundant still have personal possessions at head office. No thought for wellbeing and duty of care. A complete lack of [respect].”

Baring has been contacted for comment but had not responded by the time of going to press. A&M declined to comment.