John Lewis ‘named and shamed’ as NMW underpayer

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.