The John Lewis Partnership has announced a provision of £ 36 million to cover the potential costs of complying with the National Minimum Wage (NMW) Regulations. This was disclosed in its annual report and accounts.
While the Partnership’s contractual hourly rates of pay have never been below the NMW, it intends to work with HMRC to understand if all its arrangements meet the specific criteria of what are some quite complex Regulations.
The Partnership is specifically looking at its practice of Pay Averaging which aims to smooth 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.
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.
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Sir Charlie Mayfield, Chairman of the John Lewis Partnership 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.”
