The John Lewis Partnership is set to pay out more than £20m in employee payments this year after a change in UK legislation affected the way businesses pay staff holiday.
New laws, brought about by an Employment Appeal Tribunal ruling involving cases unrelated to John Lewis in November 2014, state that overtime must be taken into account in payments.
The partnership is one of the first to publicly announce the costs to its business as a result of adopting the legislation from next month.
These are estimated to be around £12m per year, including pensions, bonuses and employer’s National Insurance.
In addition to this annual figure, John Lewis bosses have committed to a one-off payment of around £10m, which is made up of a £3m back payment to November 1, 2014, and £7m for an associated increase in pension liabilities.
This change will affect approximately 15,000 John Lewis staff. The average payment increase per individual per year will be between £50-£150, while the backdated payments this year per employee will range between £12-£38.
At the time of the ruling, the British Retail Consortium said it was “surprised and concerned” by the verdict, adding that the costs could pose an “unacceptable risk to businesses across a wide range of sectors” and could lead to job losses.
According to the John Lewis Partnership, the annual payment represents less than 1% of the total yearly payroll outlay, the majority of which will be incurred by Waitrose, where paid overtime is more common than in John Lewis department stores.
Around 90,000 staff are employed across 43 John Lewis stores and 333 Waitrose supermarkets.
Director of personnel at the partnership Tracey Killen said: “The John Lewis Partnership has acted promptly to change its pay practices in response to the Employment Appeal Tribunal ruling. We believe our approach is a fair and practical outcome for our partners in light of this decision.”
In August 2013, both John Lewis and Waitrose were forced to make £40m in back payments after it was discovered the partnership had miscalculated holiday pay for seven years.