John Lewis sets aside £36m after minimum wage mistake

John Lewis said on Tuesday that it has set aside £36m to cover the costs of complying with national minimum wage regulations.

The company said that its practice of smoothing out a partner's pay over a year to ensure a consistent amount is paid to them each month in respect of their basic pay means it may have paid some employees less than minimum wage some months.

"This arrangement was implemented to support partners with a steady and reliable monthly income, but we now believe this arrangement may not meet the strict timing requirements for calculating compliance with the NMW regulations," it said.

There is a wide range of potential outcomes so the company has made a provision of £36m as an exceptional charge for the year ended 28 January 2017. The total provision is to cover any payments that might become due, along with employer's National Insurance, pension costs and other associated costs.

Chairman Sir Charlie Mayfield said: "In our annual report and accounts we have made a provision for any payment we may be required to make to comply with the national minimum wage regulations. In the annual report we have said that arrangements have already been made to make these payments and contact former partners.

"HMRC are aware and we intend to work with them in order to resolve some of the key points regarding the way the NMW regulations apply to our pay arrangements and practices. We expect to do this as quickly as possible. However, it is likely these discussions will take some time to be completed."