Tesco to pay back staff almost £10m after massive payroll blunder

Britain’s biggest supermarket chain said around 140,000 workers were underpaid

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Tesco will pay back almost £10m to current and former workers after a system error led to them being paid less than the national living wage.

Britain’s biggest supermarket chain said around 140,000 workers were affected, each of whom will receive around £40 on average. The reimbursement will take place by the end of this month.

The underpayment came to light when Tesco implemented a new payroll system and reviewed its old one.

The company found calculation errors were made when staff made voluntary contributions from their wages to benefits such as pensions, childcare vouchers and cycle-to-work schemes. 

The current national minimum wage is £7.20 an hour for workers who are 25 and over and £6.95 for 21- to 24-year-olds, but after incorrect deductions were made, some employees wre paid less than these levels.

Chief executive Matt Davies said: “As soon as our own review identified this issue we took immediate action to resolve it and establish which colleagues are affected.

“We've apologised to our colleagues and our priority now is to talk to them about how this affects them individually, and make any necessary payments.

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

Tesco has notified HM Revenue & Customs and shopworkers’ union Usdaw of its mistake.

Usdaw national officer Pauline Foulkes said: “We continue to work with the company to ensure all staff affected are informed and that their pay is corrected and reimbursed as a matter of urgency.

“Our priority now is to agree measures with Tesco to ensure this doesn't happen again.

“In the meantime we are providing our members with the support and advice they require.”

In February, Argos owner Sainsbury's was fined £1.5m by HMRC for paying workers less than the minimum wage.

The company reimbursed around 37,000 current and former Argos workers a total of £2.4m after “incorrect” payments were discovered.

Argos scheduled unpaid staff briefings before they had clocked on to their shifts, and security searches that could happen after workers had finished a shift.

Last month, HMRC named 360 businesses, including Debenhams, Subway and Lloyds Pharmacy, who had failed to pay the statutory minimum wage.