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John Lewis to pay out £40 million after staff holiday pay error

Around 69,000 staff at John Lewis are to receive compensation from a £40 million pot after they were inadvertently underpaid for working on a Sunday or Bank Holidays.

GENERAL MERCHANDISE

John Lewis to pay out £40 million after staff holiday pay error

Around 69,000 staff at John Lewis are to receive compensation from a £40 million pot after they were inadvertently underpaid for working on a Sunday or Bank Holidays.

In a statement, the retailer said that a recent review of holiday pay policy had revealed that 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. As a result the retailer’s Partnership Board will make one-off additional payments to staff affected by the error.

Staff will receive a one-off payment this month which will reflect the amount due to them back dated to 2006. John Lewis said the individual payments will vary according to pay and shift patterns, but that more than half of the recipients will receive under £120. 

Tracey Killen, John Lewis 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 repayments and associated expenses will cost John Lewis around £40 million, and will be  reported in the retailer’s half-year results in September. However, the sum will not be deducted from this year's Partnership Bonus pool.

John Lewis said it expects future pensions liabilities to increase by approximately £7 million as a result, with the change to add around 0.5% to annual pay costs.

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