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The employee-owned partnership that runs John Lewis department stores and Waitrose supermarkets has set aside £36m to deal with the possibility it may have broken minimum wage rules.

It said on Tuesday that its practice of “pay averaging”, where it pays staff the same amount year-round regardless of variations in how many hours they work from month to month, meant it could have paid some staff less than the minimum wage in a given month.

It said pay averaging was brought in to “support Partners with a steady and reliable monthly income” but that it now believed it meant it did not comply with minimum wage rules.

Chairman Sir Charlie Mayfield said:

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 [National Minimum Wage] 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.

It also said in its annual report for 2016/17 that Sir Charlie had waived a £66,000 bonus, meaning that his total pay fell 7.4 per cent to £1.41m. However within this the blow was softened by a 4.9 per cent, or £52,000, rise in his basic pay.

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