The Midcounties Co-operative has reviewed its employment and remuneration structure for newspaper delivery staff after being found guilty of breaching minimum wage laws, and forced to make significant payouts to two of its former employees.
The society, which has 234 food stores, is also now examining whether 200 other workers may have been paid below the minimum wage.
Delivery man Rodney Sharpe, who is 64 years old and delivered papers with the aid of a walking stick, estimates that he earned just £3.15 an hour because of the length of time his round took him, meaning an underpayment of £14,000 over four years, according to reports in The Guardian.
Roger Lilley, who is 66, claimed that he earned the equivalent of 69p an hour on some days. He was forced to use his car to deliver the 46 heavy newspapers on his round that he claimed took about two hours and 20 minutes a day to complete.
Midcounties Co-op initially denied failing to pay the minimum wage and said the round should on average have taken Lilley less than 90 minutes.
The two cases happened before Midcounties’ newspaper delivery staff were put on the payroll and paid by the hour. As a result, rates varied depending on how long different rounds took.
Following an HM Revenue and Customs (HMRC) investigation by a low pay inspector, the co-op has admitted that it failed to take into account how much Sharpe’s disability slowed down his round.
The HMRC inquiry into Lilley’s case ruled that he was paid below the minimum wage for five of the six months it assessed from 2015.
He was working seven days a week, which Midcounties has also admitted was in breach of working time regulations. Midcounties has agreed to pay him around £4,000 in missing wages and expenses.
The Midcounties Co-operative has since moved to central payroll and hourly rates for delivery staff.
Staff are now also asked to confirm if they have any health issues that may require “reasonable adjustments” to their rounds and the times involved.
Chief executive Ben Reid said: “We are grateful to Mr Sharpe and Mr Lilley for bringing this matter to our attention. After their case was escalated to our senior management team we thoroughly reviewed the employment and remuneration structure for newspaper delivery.
“All of our delivery colleagues were registered on our central payroll in 2015 and have been receiving hourly pay since January this year. We are calculating back pay that current colleagues may be entitled to and have placed notices in all of our stores asking for people employed at any time over the last four years to come forward so we can assess any historical payments that they may be due for their deliveries.
“HMRC has agreed a new methodology for calculating the time involved in completing delivery rounds and this now forms the basis of the hourly payment received by our colleagues.
“The issue that Mr Sharpe and Mr Lilley raised with us was as a result of the way we previously structured this function of our retail operation and pre-dates our move to central payroll and hourly rates for delivery colleagues. We would like to apologise to any past or present colleagues affected.”
Responding to the development, a government spokesperson added: “Everyone entitled to the National Minimum Wage or National Living Wage should receive it – that is the law.
“We are clear that when employers do not comply with the law, they will be found out and punished, and we would encourage any worker who’s concerned to contact ACAS. Every complaint received is fully investigated by HMRC.”