Textiles firm Johnson Service has embarked on a shake-up which will see 1,550 jobs go as the pandemic crushes demand from the hospitality sector.
The company, which provides work wear for factories and linen and towels for hotels, restaurants and caterers, said it was reducing its workforce through redundancies and normal staff turnover.
Johnson said that while its workwear business - serving industrial and food processing plants - was back at pre-COVID levels, its hospitality division had been hit by the latest lockdown measures.
Trading in the latter part of the business had improved slightly in September but slipped back in October to just 45% of normal levels, with demand for hotel linen particularly badly hit as local restrictions squeezed demand.
Johnson said the outlook for the remainder of the year "remains dependent on the level and impact of regional restrictions on the hospitality industry in December", following the planned ending of the current lockdown in England on 2 December.
The update illustrates that even as positive updates from COVID-19 vaccine trials lift stock markets, as a return to normal life looks closer, firms and workers are still counting the cost of the pandemic and face more uncertainty in the coming months.
It came as bosses from the hospitality sector appeared before MPs to plead for clarity about how they can reopen safely in time for the crucial Christmas season.
Johnson said that its hospitality division was "continuing to experience uncertainty".
"Whilst the news last week of a possible vaccine is encouraging, volumes currently remain unpredictable and the timing of any sustained recovery in our market remains unknown.
"Although mindful of the current reduced volumes, we are continuing to manage the business prudently and are in ongoing discussions with many of our customers so that we are in the best position possible to scale up our operations when markets return."
Johnson said it expected its hospitality division to end the year with 2,450 employees, down from 3,800 at the end of 2019.
The company said it had been using the government's job retention scheme and had 1,600 employees in the division currently on furlough, with most of the remainder being "flexi-furloughed" on reduced hours.
Johnson also said it expected to employ 2,100 people in its workwear division at the start of 2021, down from 2,300 at the end of 2019 as it cuts costs.
It said that while trading volumes for this part of the business had recovered, revenues could come under pressure due to lower levels of new sales achieved, increased uncertainty for industrial customers and the potential for further lockdowns.
The company's chief executive, Peter Egan, expressed "admiration for the way in which our employees have risen to the many challenges posed by COVID-19".
He added: "We have taken the right steps to manage our cost base and maintain a firm foundation… to provide for future strong returns when the recovery emerges."
