Unpaid staff costs John Lewis 40 million pounds

Department store chain John Lewis has been hit with an unexpected bill of 40 million pounds after an employee helped uncover a seven-year salary underpayment to staff working on Sunday or Bank Holidays. The staff-owned group, which has 30

department stores and nine John Lewis at home stores, said that a recent review of its holiday pay policy, along with the intervention of the staff member brought the expensive blunder to light.

In a statement, the retailer said that a recent review of its holiday pay policy had revealed that around 69,000 members of staff who receive certain additions to pay, such as premiums for working on Sunday or Bank Holidays had not been paid correctly under the Working Time Regulations legislation.

To resolve the issue, John Lewis is to make a one-off payment to those employees this month to cover work dating back as far as 2006. Individual payments will vary according to pay and shift patterns, however the retailer added that more than half of the recipients would receive under 120 pounds.

John Lewis pays out 40 million pounds over staff holiday pay error

The overall cost to the Partnership is expected to be “around” 40 million pounds, and will be reported in the retailer’s half-year results, which is due out in September.

The retailer also added that the “one-off payment” would not be deducted from this year's Partnership Bonus pool. It is also expected that the mix-up will also add around 7 million pounds to the company’s future pensions liabilities.

To ensure that similar mistakes don’t happen in the future, the retailer has updated its pay systems, the change is expected to add around 0.5 percent to John Lewis’ annual pay costs.

Tracey Killen, director of personnel, said: “As soon as we established that we were not implementing the Working Time Regulations correctly, we worked quickly to make the repayments to our Partners in a way that is both fair and responsible.”