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John Lewis settles £40m underpaid holiday pay….. and tens of thousands of small employers could be at risk unless they act now

John Lewis is a partnership, but holiday rules apply in the same way as to limited companies and other employers, who should urgently consider their own risk of liability for underpayments …… as claims could go back as far as 1998. myHRdept, which exists to provide employment law and HR services to small employers, explains the issues, how to establish whether your company is at risk, and what to do if it is.

Earlier this year John Lewis realised that it had for years been failing to calculate employees’ holiday entitlement correctly, not taking into account weekend overtime premiums paid to staff. Other legal cases (originating from one case brought by a British Airways pilot) have also called into question whether voluntary overtime, commission and other payments should be included in the calculation of holiday pay.

Back payments due to 1998

“Like a lot of employment issues,” says myhrdept Director Bill Larke, “there are shades of grey here and each case will need to be looked at, but there is a gathering tide here and a large volume of future claims are in our view inevitable unless employers take action now. While there are some important cases still to conclude in the legal system (including a British Gas case concerning commission and another high profile case concerning voluntary overtime) it would seem pertinent to review pay and reward practices now and to implement a strategy to help offset the risk of claims for back pay as far back as 1998 (when the Working Time regulations, which govern holiday entitlements, were introduced.)”

Those employers most at risk

Are those who have staff with: overtime payments, bonuses and commissions, zero hours, variable hours and casual contracts, sleepover pay, call out pay, unsociable hours payments and any other payments linked directly to the performance of their tasks.

What can employers do?

myHRdept are offering all existing and new customers a review of pay and holiday practices and, if action is necessary, to work with them to put in place a 3-month strategy to help mitigate the risks. “With potential compensation of thousands of pounds per employee, it would be a really good time to consider the merits of having a partnership with a pragmatic client focussed business like myHRdept. Unlike lawyers we don’t charge by the hour, and our small business support rates start at only £100 per month.”

(From their offices in Maidenhead, myHRdept have been supporting small businesses for more than 12 years, the company employs a team of 5 and includes ex Coca-Cola HR Director Bill Larke.)

If you’re thinking of outsourcing your HR why not contact With full service packages for medium sized companies typically from only a few hundred per month (and from only £100 per month for smaller companies and start-ups) we believe we offer the best combination of quality and price available in the UK. Call us on 01628 820515 to discuss your requirements or email us here and we’ll call you back.


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