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Tesco is to give back pay to tens of thousands of workers who opted to receive part of their income in non-cash benefits such as childcare, and therefore received paychecks for less than the minimum wage.

Britain’s biggest grocer has set aside £9.7m to make the payments, which follow a review of payroll errors stretching back six years.

The mistakes came to light during the implementation of a new payroll system, the grocer said, adding that it had notified HM Revenue and Customs and Usdaw of its findings.

The grocer added:

As soon as our own review identified this issue we took immediate action to resolve it and establish which colleagues are affected.

We expect payments to be up to £40 for the majority of affected colleagues.

Argos last month paid a total of £2.4m in back pay after HM Revenue & Customs inspectors found they had been paying less than the minimum wage and hit the chain, which is owned by J Sainsbury, with a £1.5m fine.

Business minister Margot James called it “completely unacceptable for any worker to be underpaid” and urged workers to look carefully at their paychecks.

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