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John Lewis Partnership makes £36m provision for NMW
May '17
John Lewis Partnership has announced in its annual report that it has made a provision of £36 million to cover the potential costs of complying with the National Minimum Wage (NMW) Regulations. The firm intends to work with Her Majesty's Revenue and Customs (HMRC), to understand if all its arrangements meet the criteria of complex regulations.
The Partnership 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, said the company in press release.
The Partnership further adds that it will make any retrospective payments required to current and former partners affected. There is a wide range of potential outcomes and it has made a provision of £36million as an exceptional charge for the year ended 28 January 2017. The total provision is to cover any payments that might become due, along with employer's National Insurance, pension costs and other associated costs.
"In our annual report and accounts we have made a provision for any payment we may be required to make to comply with the National Minimum Wage Regulations. In the annual report we have said that arrangements have already been made to make these payments and contact former partners. HMRC are aware and we intend to work with them in order to resolve some of the key points regarding the way the NMW regulations apply to our pay arrangements and practices. We expect to do this as quickly as possible. However, it is likely these discussions will take some time to be completed," said Sir Charlie Mayfield, chairman of the John Lewis Partnership. 
The John Lewis Partnership operates John Lewis department stores, Waitrose supermarkets, its banking and financial services, and other retail-related activities. While HMRC is a non-ministerial department of the UK Government responsible for the collection of taxes, the payment of some forms of state support, and the administration of other regulatory regimes including the NMW.(PA)

Fibre2Fashion News Desk – India

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