UK

John Lewis Staff Paid £40 Million After Holiday Pay Miscalculation

22/08/2013 16:18 BST | Updated 22/08/2013 16:31 BST
PA
Charlie Mayfield, Chairman of John Lewis, during a press conference after the announcement of the company's full year results revealed partnership staff are being rewarded with bonuses worth 17\% of their salaries, at John Lewis on Oxford Street, central London.

John Lewis Partnership staff received £40 million after a holiday pay miscalculation left some workers entitled to thousands of pounds in compensation.

The employee-owned retailer said 69,000 of its "partners" were receiving the additional sums in this month's wages - representing an average £580 per employee - after the miscalculations dating back to 2006.

A John Lewis Partnership spokesman said the mistake was spotted during a review earlier this year and that an employee had pointed out the error at around the same time.

It related to employment legislation, which means that when calculating holiday pay, sums ought to be based on an average weekly wage including any premiums such as extra cash for Sundays or bank holidays - rather than just on normal hours.

The group said that after the review it became clear that some partners had not been paid correctly. Its payment blunder is a particular embarrassment because its structure of employee ownership is often held up as an example by politicians of how to run a business.

The John Lewis Partnership operates 39 John Lewis stores across the UK as well as 295 Waitrose shops and has annual gross sales of more than £9.5 billion.

Today's announcement relates to the majority of the 85,500 partners who work at John Lewis department stores and the group's supermarket arm Waitrose.

The business said individual payments would vary according to pay and shift patterns, with more than half of recipients being given less than £120, but some receiving a few thousand pounds.

Those who have left through redundancy, illness or retirement will also be contacted by the group, it said.

But workers who voluntarily left the company may feel aggrieved after the company decided it would not compensate them even if they had been employed by John Lewis Partnership until recently.

The group said the one-off cost would be reported in half-year results in September, although it would not be deducted from this year's partnership bonus pool.

Future pensions liabilities are expected to rise by £7 million as a result, while pay systems have been updated to ensure all future holiday payments are correct - adding around 0.5% to 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."

The regulations go back to 1998, but John Lewis decided to cut off the start of the compensation period at April 2006 when its accurate digital records began.