John Lewis profits take £36m hit over minimum wage mistake

John Lewis Partnership's profits have taken a £36m hit after the retailer breached national minimum wage rules.

John Lewis profits take £36m hit over minimum wage mistake

The company behind John Lewis and Waitrose is working with HM Revenue & Customs to look at "pay averaging" which spreads out an employee’s wage over the year so that "a consistent amount is paid to them each month in respect of their basic pay".

In a statement, John Lewis said: "This arrangement was implemented to support Partners with a steady and reliable monthly income, but we now believe this arrangement may not meet the strict timing requirements for calculating compliance with the NMW regulations."

However, the company said that its contracted hourly pay rates have never been below the national minimum wage.

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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