John Lewis admits they may have unknowingly underpaid staff and set aside £36million to reimburse workers
JOHN Lewis has set aside £36million to reimburse staff after admitting they may have been unknowingly underpaid.
The posh store chain — motto “never knowingly undersold” — fears a blunder over the way hours were calculated meant thousands got less than minimum wage.
Sir Charlie Mayfield, chairman of John Lewis, said the company was talking to HMRC to make sure that its practices fell within the rules.
“We expect to do this as quickly as possible. However, it is likely these discussions will take some time to be completed.”
The revelation marks the latest payroll error in the retail sector after Tesco said in March it was reimbursing 140,000 current and former workers who were left underpaid.
Tesco paid affected staff up to £40 each after it found voluntary contributions made by some people to benefits such as pensions and childcare vouchers led to errors that resulted in their pay after salary sacrifice not reaching National Living Wage levels.
In February, Debenhams and Argos also revealed staff were paid less than the living wage due to payroll mistakes.
John Lewis said that apart from the under-payment error, it pays staff more than 20 per cent above the National Living Wage on average.
In April staff pay was raised by 2.7 per cent, to £8.90 an hour, although it slashed its employee bonus to 6% of annual salary - the lowest seen since the 1950s amid warnings over “uncertain” trading conditions.
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The group’s annual report also showed that Sir Charlie has waived his bonus for 2016/17, which would have seen him land a £66,000 payout, and did not take a pay rise in April.
Sir Charlie said the bonus cut was needed “to strengthen the balance sheet of the partnership while accelerating investment in Waitrose and John Lewis, in what we expect to be an uncertain market”.
The chairman said he was giving up his bonus, in recognition of the commitment that every single partner had made this year in seeing their bonus cut so sharply.
His total pay for 2016/17 fell to £1.4 million from £1.5 million the previous year.
John Lewis has also seen the size of its workforce shrink in 2016 from 91,500 to 86,700, according to the group’s latest annual report. The average number of full-time equivalent employees fell by 600 to 63,300.