John Lewis to pay £40m to compensate underpaid staff

John Lewis has admitted it made a mistake in the payment of staff working on Sundays and bank holidays under the Working Time Regulations, which will cost them around £40m in repayments and related expenses.

The retailer said a recent review of holiday pay policy revealed staff who receive certain additions to pay – like premiums for working on bank holidays – had not been paid correctly.

Around 69,000 current staff will receive an additional one-off payment this month reflecting the amounts due to them back dated to 2006. For more than half of these, the amount paid will be under £120. The figure will be reflected in the half-year results reported next month.

John Lewis expects future pensions liabilities to increase by around £7m.