140,000 Tesco employees to be reimbursed after payroll error

9 March 2017

Tesco has announced that 140,000 current and former employees will be reimbursed, after it uncovered staff had been underpaid. 

Reimbursement costs are expected to reach £9.7 million in total with the majority of affected staff expected to receive up to £40 each. 

The supermarket giant says an internal review of its reward systems going back six years, which was conducted during the implementation of a new payroll system, found the voluntary contributions made by some staff to benefits such as pensions, childcare vouchers and cycle to work schemes, led to errors that resulted in their pay after salary sacrifice not reaching National Living Wage levels.


The National Living Wage currently stands at £7.20 per hour for those aged 25 and above. 

Tesco, which employs 320,000 people in the UK, says it’s in the process of contacting affected employees, and will “ensure they all receive their reimbursement payments by the end of March”. Former staff will also be contacted.

The news comes as only last month retail giant Argos announced that staff on the National Living Wage would receive £64 after being underpaid

Matt Davies, UK and ROI chief executive at Tesco says: “As soon as our own review identified this issue we took immediate action to resolve it and establish which colleagues are affected.

“We’ve apologised to our colleagues and our priority now is to talk to them about how this affects them individually, and make any necessary payments. We expect payments to be up to £40 for the majority of affected colleagues.”

Minimum wage crackdown 'working'

The government says that since its "naming and shaming" of employers who fail to pay the minimum wage scheme began in October 2013, more than 1,000 firms have been named for underpaying staff more than £4.5 million.

Business Minister Margot James adds: "Today's announcement by Tesco shows our approach to the enforcement of the minimum wage is clearly working. We expose companies who fail to pay workers at least the minimum wage, but where there has been underpayment it is preferable that companies identify, and correct, that under payment themselves.

“It is completely unacceptable for any worker to be underpaid and everybody should check their pay ahead of the national minimum and living wages rising on 1 April.

"Any worker who believes they may have been short-changed should contact Acas, the independent employment advice service."

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