JLP to fork out £40m after staff holiday pay error

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

In a statement, the retail group said that a recent review of its 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 has decided to make one-off additional payments to staff affected by the error.

Around 69,000 staff will receive a one-off payment this month, reflecting the amount due to them back-dated to 2006. Individual payments will vary according to pay and shift patterns, with more than half of the recipients receiving under £120.

The cost of these repayments and associated expenses will be around £40m 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 expects future pensions liabilities to increase by approximately £7m as a result. Its pay systems have been updated to ensure that all future holiday payments are correct. This change is expected to add around 0.5% to annual pay costs.

Director of Personnel Tracey Killen 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 John Lewis Partnership operates 39 John Lewis shops across the UK (30 department stores and nine John Lewis at home), johnlewis.com and 295 Waitrose shops. The business has annual gross sales of over £9.5bn.

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