Harrods warehouse staff underpaid by thousands of pounds after agency error

Harrods warehouse staff have been underpaid thousands of pounds after the temporary recruitment agency employing the workers failed to award them the correct levels of holiday pay.

The error, which possibly equates to a six-figure debt owed to hundreds of lower-paid personnel, marks the latest setback to the image of the exclusive Knightsbridge retailer, which is owned by Qatar’s sovereign wealth fund and has spent the past 12 months firefighting a series of crises.

The recent difficulties have included Harrods establishing a compensation scheme in March for survivors of alleged sexual abuse by the former owner Mohamed Al Fayed, while in May the department store warned customers their personal data may have been taken after a high-profile IT breach.

Harrods warehouse workers were underpaid by The Best Connection, a temporary staffing agency that employs the staff and then supplies them under contract to Harrods.

The discovery is understood to have been made after two years of warnings to Harrods that the pricing of The Best Connection’s services raised questions if it was lowballing tender offers to corporate customers, only to make back any missing margin from lower-paid workers.

Lawyers for The Best Connection rejected any suggestion that the payroll errors were “a systemic approach that TBC or its clients take to managing costs or quoting low prices to its customers”.

The staffing agency added: “As soon as we identified this issue, we identified the employees that were impacted and reached out to them proactively to rectify the matter. A large portion of those contacted have already received payments and we are thankful for their understanding in this matter. We continue to be in contact with the remaining individuals.”

The Best Connection did not say how many workers were affected, or by how much they had been underpaid. One source with knowledge of the contract suggested the problem could have affected up to 1,000 Harrods workers and the unpaid funds might total “hundreds of thousands of pounds”, an estimate The Best Connection said was “not accurate”. The staffing agency added that “the average number of holiday days we are contacting people about is between 0.5-3 days”.

However, the length of time it took to rectify the issue – during which time The Best Connection is understood to have insisted its calculations were correct – raises further questions if there are additional cases among the labour supplier’s army of lower-paid workers.

The Best Connection boasts that it has “access to over 300,000 temporary workers” in the UK, while its website has stated: “We partner with DHL, Waitrose, Next, B&Q, Mitie, the NHS and many more.”

Waitrose, Next and DHL said The Best Connection workers they had used had been paid correctly. B&Q said it did not use the agency. The NHS said it was unaware of any issues with workers it had been supplied, while Mitie did not say if workers supplied to their organisations had been affected.

UK workers are entitled to 5.6 weeks’ leave a year, meaning a total working year of 46.4 weeks. The maths can be complicated, but that ratio broadly implies a worker’s average annual earnings need to be supplemented with an additional 12.07% payment, in order to ensure that workers accrue enough pay to cover periods when they are taking their statutory holiday.

The Guardian has seen records that suggest The Best Connection was adding holiday pay to Harrods workers’ pay packets at a rate of about 10.7% of average earnings – raising the possibility that the agency may have benefited from the difference. The Best Connection insisted its calculations were correct and suggested the variance in these holiday pay rates was “unconnected” to the underpayment to Harrods staff, which it said was caused by “human error”.

It added that the Guardian “may have confused our holiday calculation in this instance with another process sometimes used”.

Joanne Young, the chief executive of the Association of Labour Providers, said: “Workers must be paid all the holiday pay they are legally entitled to. While the calculations can be complex, underpayment, whether accidental or deliberate, is unacceptable and should be swiftly remedied. The 5.6 week entitlement, which equates to 12.07% of all hours worked, has not changed since 2020. ALP provides the tools and guidance labour providers need to comply with the law and treat workers fairly.”

The Best Connection’s failure to correctly remunerate lower-paid workers is not the first time that the company has attracted controversy.

The temporary staffing brand is perhaps best remembered for its role in the illegal pay regime at Sports Direct, which the Guardian exposed in 2015. The Best Connection was one of two agencies that made about £1m in back pay to Sports Direct workers who were not paid the national minimum wage.

A Harrods spokesperson said: “We are aware of a payslip error impacting some former employees of The Best Connection, one of the agency partners that we work with. The error relates to workers who accrued but did not use holiday days while on assignment with Harrods and was the result of a clerical error by The Best Connection that has since been corrected. All impacted individuals have been contacted by The Best Connection to receive any outstanding holiday pay owed.”