John Lewis to repay £40m of holiday pay

The John Lewis Partnership is to spend £40 million compensating employees who were accidentally paid incorrectly and did not receive certain additions to pay, such as premiums for Sunday and bank holiday work.

The organisation will make one-off additional payments to 69,000 affected employees dating back to 2006.

The amount will vary depending on pay grade and shift patterns, with more than half of the recipients receiving less than £120.

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The one-off cost will be reported in the retailer’s half-year results due to be published in September, however, the cost will not be deducted from its 2013 bonus pool. The organisation also expects an increase of £7 million to future pension liabilities.

John Lewis Partnership has now updated its pay systems to ensure future errors do not occur. The change is expected to add approximately 0.5% to its annual pay costs.

Tracey Killen, director of personnel at John Lewis Partnership, 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 employees in a way that is both fair and responsible.”