John Lewis holiday pay blunder nets staff £40m

Picture: PA
Picture: PA
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TENS of thousands of John Lewis and Waitrose staff are to receive an average of £350 after the retailer admitted it had made a £40 million pay blunder dating back seven years.

The partnership said a recent review of its holiday pay policy had found that staff had not been paid correctly under the Working Time Regulations legislation.

The issue affects people who had worked Sundays and bank holidays since 2006.

While some workers – or “partners” – will pocket several thousand pounds, more than half of those affected will receive less than £120.

Around 69,000 current staff will receive an additional one-off payment this month with the actual amount depending on shift patterns and salaries. The £40m total hit, which includes national insurance 
liabilities and administration costs, will be reflected in its half-year results in September.

The employee-owned group, which operates 39 John Lewis stores across the UK as well as 295 Waitrose shops, stressed the sum will not be deducted from this year’s partnership bonus pool. The firm said it expects future pension liabilities to increase by some £7m as a result of the issue.

Pay systems have been updated to ensure that all future holiday payments are correct with the change expecting to add around 0.5 per cent to annual pay costs.

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.”

Under the regulations, amounts staff are paid during holidays should reflect a proportion of the extra payments they receive for working Sundays and bank holidays.

In March, John Lewis said it was boosting its staff bonus following a surge in online sales that put the partnership back on the path of rising profitability last year.

About 2,400 employees working for the group’s three eponymous department stores and five Waitrose supermarkets in Scotland benefited from a bonus of 17 per cent of salary, which was driven by the company’s rapidly expanding online operation.

The retailer posted a 16 per cent rise in profits to £410m, with £210.8m set aside for staff bonuses equivalent to nine weeks’ extra pay. Group sales were 9 per cent higher at £8.5 billion.

The latest bonus compares to 14 per cent the previous year, when the pay-out was cut for the first time since 2009. Profits for the same period fell by 4 per cent.

The company is due to open a Waitrose supermarket in Helensburgh, Dunbartonshire, following the opening of its fifth Scottish food store, in Stirling last year.