John Lewis Partnership has set aside £36m after finding that its staff rota systems have not complied with the Government's national minimum wage regulations.
The employee owned retailer, which prides itself on doing right by its 'partners', said that it will work with HM Revenue and Customs to investigate its practice of "pay averaging" which aims to "smooth out" an employee's pay over the year to ensure a consistent amount is aid each month.
"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", John Lewis says in its annual report.
The retail group, which runs the John Lewis department stores and Waitrose food shops, said that it is booking a £36m exceptional charge to cover any retrospective payments that are required to current and former partners affected.
It follows a decision by John Lewis to reduce its highly feted staff bonus to the lowest level since the 1950s.
As a result, chairman Sir Charlie Mayfield is also waiving his £66,000 bonus for the year.
Sir Charlie will still receive a £1.4m salary, following a 4.9pc increase in basic salary to £1.1m.
He also receives a £300,000 defined benefit pension entitlement, although his total pay package is 7.4pc lower than the previous year.
John Lewis said that the chairman's pay was 70 times the average basic pay of non-management partners.
In January the employee-owned retail group announced that it would pay staff a 6pc bonus, compared to 10pc last year, in order to retain profits to invest online. John Lewis also planning to cut 387 jobs as part of an overhaul of its cafes and restaurants and curtain fitting service.
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