John Lewis in £40m staff holiday pay blunder

The department store has stumped up the cash after a worker spotted it had been underpaying staff for seven years.

by Gabriella Griffith
Last Updated: 23 Aug 2013
The John Lewis Partnership has revealed it underpaid 69,000 workers over a seven-year period, a sizable snafu that will cost the department store an estimated £40m.
 
The company, which owns butter-wouldn’t-melt chains John Lewis and Waitrose, has admitted an error in its holiday pay calculation system, affecting employees who worked Sundays and bank holidays.
 
Rather than the mistake being spotted by head office, an employee with a ‘customer facing’ role spotted the underpayment.
 
The employee ‘joined from another company where they would have had similar supplements in their holiday pay and asked the question,’ said a spokesman for John Lewis.
 
The exact ‘question’ has yet to be revealed but the pertinent enquiry, combined with a review of the company’s holiday pay policy, unveiled the extent of the miscalculations.
 
‘This review was happening anyway. The two came together and led to the quick response,’ added the spokesperson.
 
The compensation will be paid out in one-off payments, with the majority of people getting less than £120. The partnership has promised the cost of compensation will not be deducted from the current year's bonus pool but is expected to add £7m to its pension deficit.
 
It’s a bit of egg on the face for good old John Lewis, which is often lauded as an exemplary employer. It is the UK’s leading example of co-ownership, where the staff are partners in the business and is often cited as one of the best companies to work for.
 
John Lewis has reported that the pay system has been updated to avoid any further screw-ups. Staff can rest assured they’ll be ‘never knowingly [or unknowingly] underpaid,’ again.

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