John Lewis Partnership has been forced to restate its profits for last year to the tune of £36m after admitting that it has breached minimum wage rules. Thousands of workers could now be set for a windfall after the retailer, which runs John Lewis department stores and Waitrose food shops, admitted the payroll error affected all staff who had been paid by the hour over the past six years. The payroll error is embarrassing for John Lewis as it has been highly feted by politicians for its employee-ownership model and its commitment to “happiness of all members”, who are known as partners within the company. John Lewis said that the problem arose because of its “pay averaging” practice which smooths out income to ensure staff receive the same monthly salary, regardless of how many hours they work each month.
The John Lewis Partnership has restated its profits for last year by £36m ($46.6m) after confirming it had breached rules around payment of the minimum wage and would need to award backpay. The Partnership, which runs John Lewis department stores and Waitrose grocery shops, confirmed that a payroll error relating to a “pay averaging” practice meant that all staff receiving hourly pay over the last six years had been affected by the mistake. A spokesman said: “We have taken immediate action with our supplier in order to ensure this does not happen again.