An Employment Appeal Tribunal ruling on 4 November 2014 changed the way UK legislation is applied in relation to holiday pay. In light of this ruling, from February 2015, the John Lewis Partnership will take paid overtime into account when calculating holiday pay for Partners. In addition, a one-off back payment will be made, where applicable, for holidays taken since 1 November 2014 in order to align as closely as possible to the date of the ruling.

The cost of these changes will be around £12 million annually (including pension, Bonus and employer's NI), representing less than 1% of the total annual payroll costs. The majority of these costs will be incurred in Waitrose where paid overtime is more usual than in John Lewis. This financial year there will be a one-off cost of around £10 million, comprising c. £3 million for the back payment and c. £7 million to recognise an increase in pension liabilities.

Tracey Killen, the Partnership's Director of Personnel, said: 'The John Lewis Partnership has acted promptly to change its pay practices in response to the Employment Appeal Tribunal ruling. We believe our approach is a fair and practical outcome for our Partners in light of this decision.'