Member Article

John Lewis facing up to £36m minimum wage underpayment bill

The John Lewis Partnership, which operates John Lewis and Waitrose, has revealed it is facing up to a £36m bill after discovering it may have been underpaying its minimum wage staff.

The partnership has said it is working with the HMRC to work out whether it has ran afoul of the law in regards to its practice of pay averaging, which it says aims to average out a partner’s pay over the year to ensure they receive a steady source of income.

While it said none of its staff had been paid below the national minimum wage, with its non-management staff earning on average £8.90 per hour, the company believes it may not have complied with the strict timing requirements outlined by the national minimum wage regulations.

The partnership said it would conduct its own review into the matter and that it had set aside £36m in respect to potential back payments to current and former employees stetching back six years.

As a result, the company has revised down its pretax profits for 2016-17 from £577m to £541m.

Sir Charlie Mayfield, Chairman of the John Lewis Partnership said: “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.

“In the Annual Report we have said that arrangements have already been made to make these payments and contact former Partners.

“HMRC are aware and we intend to work with them 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.”