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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.

Copyright The Financial Times Limited 2018. All rights reserved.

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