* To work with regulator on minimum wage regulations
* Will make retrospective payments to staff if required
* Chairman to waive annual bonus
(Adds detail, background)
LONDON, May 9 British retailer John Lewis said
it has set aside 36 million pounds ($47 million) to cover
possible costs as it may have breached UK wage rules, a
potential embarrassment for a company lauded for the way it
treats its staff.
The John Lewis Partnership, owner of the John Lewis
department store chain and upmarket Waitrose supermarkets, said
on Tuesday that while its contractual hourly rates of pay have
never been below the national minimum wage (NMW), it plans to
work with Britain's revenue and customs department to see if all
its arrangements meet the specific criteria of the complex
Last year the government announced a series of increases in
the minimum wage, which will make it 13 percent higher than it
would otherwise have been by 2020.
The John Lewis Partnership is often held
up in Britain as an exemplary employer. It calls its staff
partners and its employee-owned business model has been praised
It said it 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," it said.
The company said that once it has completed a review, it
will make any retrospective payments required to current and
Since there is a wide range of potential outcomes it said it
has made the 36 million pounds an exceptional charge in its
financial year to Jan. 28 2017.
The provision was detailed in the partnership's annual
report and accounts for 2016-17.
They also revealed that Chairman Charlie Mayfield has waived
his bonus for 2016-17, which would have been 66,000 pounds. That
decision reflected the performance of the group in the period.
Mayfield's total reward fell by 7.4 percent to 1.41 million
In March the group reported a fall in the trading profits of
both Waitrose and John Lewis department stores for 2016-17. It
also cut its staff bonus to 6 percent, the lowest percentage
payout since 1954, saying it needed to preserve cash to brace
for difficult times ahead.
In April the department store business said it would cut
hundreds of jobs in a reorganisation of its soft furnishings
business and changes to the way it operates its in-store
($1 = 0.7727 pounds)
(Reporting by James Davey; Editing by Alistair Smout and Susan