Two of the UK’s biggest retailers have underpaid their employees for several months, forcing some to use foodbanks and skip meals to make ends meet. The payroll system glitches to have hit Asda and Next separately come at a time when current wages are insufficient to meet rapidly rising rates of inflation in the country.

Next’s issues are reported to have begun in February after outsourcing its payroll management to tech company Oracle. Although Next employs approximately 43,000 people in the UK, it is unknown exactly how many have been affected by the error. Some staff claimed they had received as much as £200 less than their true wage.

Similarly, Asda bosses also said that some workers lost out on more than £500 after almost 11,000 errors were made by the external payroll provider. This has affected the wages of 5,500 members of staff.

GMD national officer, Nadine Houghton, highlighted how “paying for the work [the workers] do is an utterly basic responsibility of employers”. She added:

“Asda knows it is a massive issue, but sadly isn’t doing enough to put this right – they refuse to invest the money needed in the payroll operation to sort this out. During a cost-of-living crisis, low- paid workers must be able to rely on a level of decency from their employer that ensures they are paid for the work they do.”

A report from the UK’s Office of National Statistics (ONS) found 23% of the public struggled to pay their usual household bills in March compared to last year (2021). StepChange also gathered data displaying an approximate 25% of people who believed they were likely to fall into debt due to rising living costs. Additionally, the percentage of people who felt they were unlikely to repay their debt was 11%.

With these payroll errors happening during such a crisis, it can only be expected to see potential liabilities. Daniella McGuigan, partner at employment law firm Ogletree Deakins, has stressed how “good communication and fixing the errors fast will be essential to minimise the damage to employee relations”.

Employees are protected under the 1996 Employment Rights Act. If an employer is found to have unlawfully deducted worker wages, then a Tribunal claim can be made if the worker has been underpaid in this instance. The employee can claim payment or repayment of the wage that was unlawfully reduced.

McGuigan added:

"Tribunals may also award a sum that it 'considers appropriate' to compensate for 'any financial loss sustained which is attributable to the matter complained of'. This may cover, for example, bank charges or interest if the deduction causes the employee’s bank account to be overdrawn or if they incur late penalty charges as they have been unable to meet household bills and financial commitments, for example. It could, therefore, be a costly 'mistake'. It appears that Next has admitted the error(s). That may be the end of the matter as long as the mistakes are rectified quickly, however, if it isn’t employees will understandably run out of patience."