John Lewis Partnership faces a £12 million annual cost for additional holiday pay as a result of efforts to comply with an Employment Appeal Tribunal ruling on 4 November 2014 that changed the way that UK legislation is applied in relation to holiday pay.
The sum includes pension, bonus and national insurance costs.
But for this financial year, the employer faces a slightly lower one-off cost of £10 million, which comprises £3 million for the back payment of holiday taken since 1 November 2014 and £7 million to recognise an increase in pension liabilities.
The employee-owned retail group’s employees (known as partners) will share the £3 million in their February pay.
The payment follows the organisation’s payment of £40 million in compensation for 69,000 employees, who were accidentally paid incorrectly and did not receive certain additions to pay such as premiums for Sunday and bank holiday work, in August 2013.
The majority of the new costs will be incurred in Waitrose, where paid overtime is more usual than in John Lewis.
Tracey Killing, director of personnel at the John Lewis Partnership, 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 [employees] in light of this decision.”