John Lewis Partnership makes provision for potential costs of complying with National Minimum Wage
In a statement, the partnership said that its contractual hourly rates of pay have never been below the National Minimum Wage but it intends to work with HMRC to make sure that all its arrangements meet the specific criteria of what it described as some “quite complex” regulations.
In addition, it is specifically looking at its practice of Pay Averaging which the partnership said aims to smooth out a staff member’s pay over a year to ensure a consistent amount of basic pay is paid to them each month.
John Lewis said the arrangement was implemented to enable staff to have a steady and reliable monthly income, but it now believes this may not meet the strict timing requirements for calculating compliance with the National Minimum Wage regulations.
Once the review is completed, the partnership will make any retrospective payments required to current and former staff affected. A provision of £36 million as an exceptional charge has been made for the year ended 28 January 2017. The total provision is to cover any payments that might become due, along with employer's National Insurance, pension costs and other associated costs.
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.”
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