John Lewis in £40m holiday payout

john LewisThe John Lewis Partnership is paying out £40 million to its staff after miscalculating holiday pay over the last seven years, leaving some workers entitled to thousands of pounds in compensation.

The employee-owned retailer said 69,000 of its "partners" were receiving the additional sums in this month's wages - representing an average £580 per employee - after the miscalculations dating back to 2006.

A spokesman for the John Lewis Partnership said the mistake was spotted during a review earlier this year and that an employee had pointed out the error at around the same time.

It related to employment legislation, which means that when calculating holiday pay, sums ought to be based on an average weekly wage including any premiums such as extra cash for Sundays or bank holidays - rather than just on normal hours.

The group said that after the review it became clear that some partners had not been paid correctly.

Manly affected were those working on shop floors, call centres or in distribution warehouses.

Today's announcement relates to the majority of the 85,500 partners who work at John Lewis department stores and the group's supermarket arm Waitrose.

The business said individual payments would vary according to pay and shift patterns, with more than half of recipients being given less than £120, but some receiving a few thousand pounds.

Those who have left through redundancy, illness or retirement will also be contacted by the group, it said.

But workers who voluntarily left the company may feel aggrieved after the company decided it would not compensate them even if they had been employed by John Lewis Partnership until recently.

The group said the one-off cost would be reported in half-year results in September, although it would not be deducted from this year's partnership bonus pool.

Future pensions liabilities are expected to rise by £7 million as a result, while pay systems have been updated to ensure all future holiday payments are correct - adding around 0.5% to annual pay costs.

Tracey Killen, director of personnel, 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 partners in a way that is both fair and responsible."

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The regulations go back to 1998, but John Lewis decided to cut off the start of the compensation period at April 2006 when its accurate digital records began.

Sources at the group believe its effort to address the discrepancy "goes beyond what other companies would do".

The John Lewis Partnership operates 39 John Lewis stores across the UK as well as 295 Waitrose shops and has annual gross sales of more than £9.5 billion.

Its payment blunder is a particular embarrassment because its structure of employee ownership is often held up as an example by politicians of how to run a business.

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