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Busy Shoppers in Oxford Street, London, walking past the flagship John Lewis store.
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John Lewis ‘named and shamed’ as NMW underpayer

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John Lewis is one of 191 employers listed on the government’s ‘name and shame’ list for failing to pay workers national minimum wage. 

6th Aug 2021
Editor AccountingWEB
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The John Lewis Partnership was included in the government list of employers named for not paying the national minimum wage (NMW). Other high street brands such as The Body Shop, Martin McColl and Pret A Manger featured alongside the employee-owned department store group .

It wasn’t just retail brands that were named for short-changing workers; the NMW “name and shame” list also featured football clubs Charlton Athletic, Crewe Alexandra, Oldham Athletic and Sheffield United. 

The Department for Business, Energy & Industrial Strategy (BEIS) list flagged up breaches from 191 businesses between 2011 and 2018 that totalled £2.1m and affected more than 34,000 workers. The employers named were fined £3.2m and have paid back what they owe. 

Of the 191 businesses on the list, 47% wrongly deducted pay from workers’ wages, including for uniform and expenses, and 30% failed to pay workers for all the time they had worked, such as when they worked overtime.

Business minister Paul Scully said: “Our minimum wage laws are there to ensure a fair day’s work gets a fair day’s pay – it is unacceptable for any company to come up short. All employers, including those on this list, need to pay workers properly.”

A technical breach

John Lewis was arguably the biggest household name and biggest perpetrator on the list, after it was reported that the store failed to pay £941,355.67 to 19,392 workers. 

But the retail giant responded that it was “surprised and disappointed” that BEIS had chosen to report this episode.  

“This was a technical breach that happened four years ago, has been fixed and which we ourselves made public at the time,” a John Lewis spokesperson told AccountingWEB. 

“The issue arose because the partnership smooths pay so that partners with variable pay get the same amount each month, helping them to budget. Our average minimum hourly pay has never been below the national minimum wage and is currently 15% above it.” 

Salary sacrifice

Coffee chain Pret A Manger was named on the list for an incident where the underpayment involved a form of salary sacrifice. 

“In this unique case from 2019, a small number of team members opted to allocate some of their salary in exchange for childcare vouchers as part of a voluntary salary sacrifice scheme,” a Pret A Manger spokesperson told AccountingWEB:  

“Government rules dictate that these ‘deductions from pay’ reduce the national minimum wage eligible pay and therefore this inadvertently caused remuneration to fall below minimum levels. The government has since changed the rules on voluntary salary sacrifice schemes and how they interact with the NMW underpayment list, in recognition of the benefits they can bring to employees.”

Other big names on the list

The second biggest employer named on the list was newsagent Martin McColl, which was pulled up for failing to pay £258,047.8 to 4,366 workers. Convenience store One Stop Shop came third in the name and shame table for owing £56,505.04 to 2,631 workers. 

Welcome Break was the fourth biggest employer underpaying £49,031.77 to 1591 workers. The motorway services operator also made the list back in 2015, when it blamed an IT problem for failing to pay £1,318.70 to 20 people.

Since 19% of minimum wage breaches affected those on apprenticeships, the BEIS reminded employers of the correct way to pay apprentices with some updated guidance. 

The name and shame campaign has called out big names over the years including Debenhams and H&M. The scheme paused in 2018 to evaluate its effectiveness, but a couple of years later the government decided to revive the minimum wage short changer list. 

The last time rogue employers were named and shamed was in December 2020 when 139 companies failed to pay £6.7m to their workers. The biggest names on the list then were the supermarket Tesco and the takeaway and restaurant chain Pizza Hut

Replies (6)

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By VATs-enough
06th Aug 2021 21:43

John Lewis..... story about minimum wage payments.... deja vu or (yawn) 'old news'.

Must be a slow news day somewhere, we had this conversation 4 years ago

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By Hugo Fair
06th Aug 2021 23:07

QUOTE: "The Department for Business, Energy & Industrial Strategy (BEIS) list flagged up breaches from 191 businesses between 2011 and 2018 that totalled £2.1m and affected more than 34,000 workers. The employers named were fined £3.2m and have paid back what they owe."

How pathetic of BEIS ... the vast majority of breaches are 'technical' ones (the equivalent of getting a parking ticket despite paying but accidentally placing the receipt upside-down on the dashboard).

Anyway if you do the maths ... 'underpayment across *whole UK* was average of £262.5k p.a. - and less than £62 per affected employee on average across 8 years (so under £8 p.a.)!
So well worth the bother and expense of a 'naming and shaming' exercise that doesn't get reported in the national press?

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By Paul Crowley
07th Aug 2021 14:29

Agree comments so far
HMRC are outrageous zealots on technical breaches
Eg worker buys their own shoes or smoothing between pay periods

Yet do zero on HUGE home office tax evasion on IR35
Perhaps name and shame government departments.
pour encourager les autres

les autres being other government paid contacts as well as direct government departments

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Tornado
By Tornado
07th Aug 2021 19:16

How much did it cost US to find out the shattering fact that 2,631 One Stop Employees had been underpaid an average of £21.48 in total each.

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Maddy Christopher
By Maddy Christopher
09th Aug 2021 11:25

Charity care provider MHA has released a statement against HMRC naming and shaming them for a technical breach of legislation in six instances when rent paid was not taken into account in employee net pay to meet NMW.

MHA stated:
"As is our duty, we have made good the situation and have systems in place to make sure it does not happen again. However, we fundamentally disagree with HMRC’s approach to accommodation within the legislation and believe that it was not the intention to penalise charities that pay their people well and choose to rent properties.

We robustly challenged their approach and considered it a legal challenge. However, we could not be certain or limit the costs of a legal challenge or that we could guarantee the outcome. We are conscious that as a charity, we need to direct our work for the benefit of the older people we care for and support.

MHA is proud to pay at a minimum the Real Living Wage to its care workers and other staff. Clearly technical breaches such as this need to be addressed, but it’s vital that the Government comes forward with its long-promised reforms for the care sector, including recognising and remunerating the skills of care workers and proposing a much-needed workforce strategy."

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By Roland195
09th Aug 2021 12:21

Every article I have ever read regarding NMW has been the same - a minor technicality than HMRC (for some reason) have absolutely gone out of their way to find, with a zeal they can't seem to come up with for any of their other responsibilities reported as though they have uncovered a Dickensian sweatshop.

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