Next faces HMRC enquiry after incorrect employee payments

Next is under investigation by HMRC after a botched implementation of a new payroll system left its employees receiving incorrect payments. 

The fashion retailer replaced its in-house payroll software with a system from Oracle earlier this year. This change resulted in an increase in both underpayments and overpayments, with workers on the minimum wage being underpaid and others overpaid, causing some to lose access to their benefits.

A source told The Times that “more than a dozen people in my store didn’t get paid right last month. Morale is awful — I have never known it to be as bad as this.”

Next had to find a new licensed, third-party payroll provider after learning that its previous software would be discontinued this year.

In 2018, the retailer is said to have signed a five-year licence with Oracle, and has paid the software giant over £10 million to date. The implementation of the payroll system has lasted almost four years, according to The Times.

The retailer attributed the botched implementation to the pandemic.

Next also acknowledged that it had tried to replicate too much of the functionality from its original payroll system in too tight a timeframe, resulting in Next going live with an untested system.

In a statement to the The Times, Next said: “We acknowledge the frustration many colleagues have felt and reiterate our sincere apologies."

Last week, Next increased its full year profit guidance after seeing full price sales lift 5% in the past three months. The group’s second-quarter sales performance exceeded expectations by £50 million, and the chain has lifted its full-year profit guidance by £10 million to £860 million.