John Lewis and Waitrose staff on the minimum wage may be due a share of £36 million, as the retailers have discovered a potential payroll error.
The John Lewis Partnership, which operates 48 John Lewis shops and 354 Waitrose shops, is working with HMRC to check it has processed payments correctly.
The concern is about the Partnership’s practice of ‘pay averaging’, which aims to ensure staff are paid a consistent amount every month. For example, some rotas may mean staff work more hours one month than other months – but pay averaging means staff get a steady and reliable income each month. The problem is that the Partnership believes this arrangement may not have met the “strict timing requirements” for paying the minimum wage.
It has put aside £36 million to “cover any payments that might become due, along with employers’ National Insurance, pension costs and other associated costs”. The Partnership adds that it will make any retrospective payments required to both current and former colleagues.
However, the Partnership says its contractual hourly rates of pay have “never” been below the minimum wage.
Sir Charlie Mayfield, chairman of the John Lewis Partnership says: “In our Annual Report and Accounts we have made a provision for any payment we may be required to make to comply with the National Minimum Wage Regulations (NMWR).
“In the Annual Report we have said that arrangements have already been made to make these payments and contact former Partners. HMRC is aware and we intend to work with it in order to resolve some of the key points regarding the way the NMW Regulations apply to our pay arrangements and practices. We expect to do this as quickly as possible. However, it is likely these discussions will take some time to be completed.”
The disclosure comes after Argos announced staff would receive £64 in underpayments in February, while Tesco announced in March that 140,000 Tesco employees would be reimbursed following payroll errors.