Asda, a key player in the supermarket and retail sector, has encountered a significant payroll issue affecting nearly 10,000 of its employees due to a flawed IT upgrade supervised by co-owner Mohsin Issa.
An internal memo addressed to top executives revealed that the pay of numerous hourly-paid workers has been impacted by this technical error, leading to underpayments as reported by union representatives.
An employee at Asda disclosed that some staff members experienced deductions equivalent to two weeks’ salary on their March payslips due to this problem.
This payroll disruption marks a significant challenge for Asda’s current leadership, including the Issa brothers and the private equity firm TDR Capital, as they work to separate the company’s IT infrastructure from that of its former parent company, Walmart.
This IT overhaul, known within the company as “Project Future”, faced its first real test this week when Asda management implemented a new payment processing system.
In a recent communication to store managers, Asda leadership acknowledged that approximately 9,500 hourly employees were affected by payroll inaccuracies. They attributed the issue to a specific holiday pay calculation error during the transition to new systems. The company assured managers that steps were being taken to rectify this, aiming to correct the pay by the upcoming Friday.
To address the shortfall, Asda committed to compensating employees with the same amount they received in February.
Despite these efforts, the GMB union, representing Asda employees, reported that some workers still experienced underpayment due to the flawed system update.
An Asda staff member expressed widespread frustration among colleagues, describing the situation as chaotic.
A GMB spokesperson highlighted the serious impact of these payroll errors on Asda’s workforce, noting that incorrect and reduced pay could cause significant stress, especially for those in lower-paying roles.
“We trust that Asda will swiftly address this matter for the employees who diligently operate Asda’s stores daily.”
The timeline for resolving the issues with Asda’s payroll system remains uncertain.
Nonetheless, the extensive process of separating Asda’s IT infrastructure from that of its previous owner, Walmart, continues. This effort has been in progress for three years since the Issa brothers acquired the supermarket chain for £6.8 billion.
Challenges encountered in the project have led to Asda still incurring costs for utilizing Walmart’s systems. However, company leaders are optimistic about completing the transition before the close of 2024.
