UPDATE 1-Staff pay blunder costs UK's John Lewis 40 mln stg
* Employee helped uncover staff pay shortfall
* 69,000 partners to receive one-off payments
* Firm to account for 40 million pounds in H1 results
* Annual pay costs to rise 0.5 pct
By James Davey
LONDON, Aug 22 (Reuters) - A sharp-eyed employee of Britain's John Lewis Partnership helped uncover a seven-year salary underpayment to staff that will cost the retailer 40 million pounds ($62.8 million) to fix.
The staff-owned group, which trades from 39 department stores and the 295-store Waitrose supermarket chain, said on Thursday the intervention of the staff member, who performs a "customer facing" role, combined with a review of its holiday pay policy to bring the expensive blunder to light.
The error relates to employees who receive certain additions to pay, such as premiums for working on Sundays or bank holidays, not being paid correctly under the UK's Working Time Regulations legislation.
The employee "joined from another company where they would have had similar supplements in their holiday pay and asked the question," said a spokesman for John Lewis.
"This review was happening anyway. The two came together and led to the quick response," he said.
John Lewis is Britain's largest example of co-ownership where all 85,500 staff are partners in the business, so an admission it underpaid its employees could be seen as embarrassing.
"We're being very open and saying we didn't get this right and we're doing everything we can to correct it, and we're paying back as far as we can with the data we've got," said the spokesman.
Some 69,000 partners will this month receive additional one-off payments reflecting amounts due to them back dated to 2006.
Individual payments will vary according to pay and shift patterns, with more than half of the recipients receiving under 120 pounds.
John Lewis will account for the 40 million pounds, which include repayments plus associated pension, National Insurance and administration costs, in its half-year results due to be published on Sept. 12 but will not deduct the sum from this year's partnership bonus.
It expects future pensions liabilities to increase by about 7 million pounds, while annual pay costs will rise by about 0.5 percent.
John Lewis added that its pay systems had been updated to ensure that all future holiday payments are correct.
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