John Lewis sets aside £36m to fix Minimum Wage error

The retailer admits disappointment over underpaying staff for the past six years and says it plans to 'make good' the amounts with the multi-million pound provision

John Lewis has made a provision of £36m to correct a minimum wage payment blunder.

The retailer announced today that it identified that some of its pay practices over the past six years did not technically comply with National Minimum Wage (NMW) Regulations in the UK.

In its Annual Report, Sir Charlie Mayfield, Chairman of John Lewis Partnership, said: “Clearly this is very disappointing, not least because the vast majority of payments to affected Partners and former Partners relate to technical underpayments rather than actual underpayments of their contractual pay.

“Nevertheless the NMW Regulations create a strict liability regime and these payments are therefore required to be paid even in cases where Partners have over the course of a year been paid the correct contractual amount.”

John Lewis said that it ran into trouble because its pay averaging arrangements do not meet the strict timing requirements of the NMW Regulations.

It said that although staff will usually have received the correct pay in a year, in some months where greater than average hours are worked they will have been paid less than the hourly rate stipulated.

The problem was spotted after a partner raised concerns about their monthly pay following the annual results published in March, The Guardian reported.

The retailer will now make retrospective payments to current and former staff affected – a wide range of potential outcomes is expected.

John Lewis’ contractual hourly rates of pay have never been below the NMW.