Next apologises to staff after IT problems cause months of underpaying

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The retailer Next has apologised to staff for months of salary underpayment caused by the botched implementation of a new computer system.

The FTSE 100 company has been working for months to stem issues caused by a decision to outsource its payroll functions to the US technology company Oracle. The first problems emerged in February and have affected workers paid weekly and those paid monthly.

The problems have deprived some Next staff of pay during the cost of living crisis amid rapid consumer price inflation that is denting workers’ spending power.

The retailer pays some store staff £9.36 an hour, below the Living Wage Foundation’s recommended £9.90 an hour rate outside London and £11.05 inside the capital.

Next is run by the Conservative peer Simon Wolfson. As chief executive, Lord Wolfson will receive £4.4m in pay this year, the highest level since 2015, after investors backed a 50% pay rise in May. The Church of England’s pension board has criticised “major increases in executive pay in consumer-facing companies such as Next where the workforce are not accredited as being on a living wage”.

It is not the first time this year that payroll issues have affected a large UK employer. Asda, the supermarket chain owned by the petrol station billionaires Mohsin and Zuber Issa and the private equity fund TDR Capital, has admitted that some workers lost out on as much as £500. Its external payroll provider made nearly 11,000 errors in recent months, affecting the wages of 5,500 staff.

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Next declined to say how many of its 43,000 workers were affected, but a spokesman said the number had declined from the peak. A spokesperson said: “We expect to continue to make significant progress in the weeks ahead.”

Employees have been underpaid by as much as £200 a month, while some have been forced to rely on food banks or hand back holiday days to make ends meet, according to the Sunday Times, which first reported the problems.

Next usually designs its own software, but has struggled to make Oracle’s software work with its own. Instead it has been forced to assign a dedicated team to try to spot errors and pay the missing money to workers every week.

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In some cases staff also had pension contributions deducted from their pay that were then not invested in pension funds. Next said it would make sure that those problems were also rectified and any losses for workers made good.

“Over the last few months we have experienced a number of issues with our new payroll system and have been tackling them as a matter of urgency,” the spokesman said. “This is one of the very few instances where Next has outsourced critical software and we have learnt some important lessons about integrating our in-house applications with third-party platforms.

“We are acutely aware of the problems these payroll errors have caused some of our colleagues. We sincerely apologise to all those affected and assure them that we are resolving these problems as a priority.”