// Next is under fire after a botched software rollout left some staff underpaid and forced to borrow money from family & friends
// HM Revenue & Customs is now investigating whether the retailer paid some of its staff less than the UK’s statutory minimum wage
Next is facing an investigation by the UK’s tax authority after a botched rollout of a new payroll system led to thousands of staff receiving incorrect salary payments.
The Sunday Times reported that after the business replaced its in-house payroll software with a system from Oracle at the start of the year there was an immediate increase in both underpayments and overpayments among weekly and monthly paid staff.
Last week the fashion retailer upgraded its full-year profit forecast after warm weather and demand for formal clothing helped boost its sales in the first half of the year.
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HM Revenue & Customs is now investigating whether Next paid some of its staff less than the UK’s statutory minimum wage, which is £9.50 an hour for those aged 23 and over.
The errors from Next come at a time when inflation has hit its highest level in 40 years with the Bank of England hiking interest rates by 50 basis points, its largest single increase since 1995.
Next confirmed that an investigation by HMRC is under way and that it has been deemed a “medium-risk” corporate taxpayer rather than a low-risk one.
The retailer said it had so far found no evidence that staff had been paid less than the minimum wage.
If found in breach, the tax authority can impose penalties on a business of up to 200 per cent of the arrears owed to workers who were paid below the minimum wage.
Next said that in light of the problems it had introduced a separate IT system to cross-check Oracle’s output and reduce incorrect payments, and that in the latest payroll round the number of errors was 219 out of a workforce of 43,000.
The retailer admitted that the errors had caused financial difficulties and distress to those who were underpaid and those whose salaries were topped up by state benefits.
The Sunday Times revealed that some Next staff said they were unable to afford bus fares to get to work, and were forced to borrow money from relatives to pay bills, or lost benefits after being overpaid.
“We acknowledge the frustration many colleagues have felt and reiterate our sincere apologies,” the fashion retailer said.
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