Shares in recruitment firm Staffline have plunged after it announced plans to almost double the amount of money set aside to deal with historic underpayment of workers to £15.1 million.
The Nottingham-headquartered company also confirmed it would look to scrap its dividend for 2018 in a bid to rise £37 million to cut debt, as it prepares to release its financial results later this month.
A review into Staffline suggested in March the underpayment related to the preparation time of workers in some food production facilities. This includes the period spent putting on workwear and relates to a period between 2013-2018.
In response to the findings, the group , which included £3.5 million directly for the underpayment. The company has now increased this to £15.1m.
Reporting the news prior to the group's annual financial results later this month, the company said non-recurring exceptional costs for 2018 will now stand at £32.6 million.
Addressing the underpayment issue, a statement from Staffline said: "These procedures have now been rectified so that all work related time is paid in accordance with current legislation.
"Any additional time paid is charged to the customer in the same way as all other hours supplied.
"However, the additional costs incurred in relation to historical non-compliance (of National Minimum Wage Regulations 2015) are not recoverable from customers. The nature, complexity and volume of data that has been analysed as part of the additional independent specialist review, and the subsequent audit of this information has been a very significant undertaking which took several months to complete.
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"Furthermore, the calculation of underpayments is a difficult and complex matter requiring judgement and the application of assumptions, all of which have been subject to discussions with HMRC."
Share prices in the company, which was founded in 1986, plunged after the announcement was made today (June 17). By 8.30am it had tumbled by almost 25 percent.
It also confirmed it will scrap its dividend and look to raise £37 million to cut debt. Despite this, the firm says it still expects to report an underlying performance for the year ending 31 December 2018 in line with expectiations.
Chris Pullen, chief executive of Staffline, said: "Whilst the time taken to announce our 2018 financial results is frustrating, we look forward to posting these results at the end of June at which point we expect the business to return to normalised trading.
"Staffline continues to enjoy a unique position in its markets and once this episode is behind us we are confident of a return to future growth."
Staffline is one of Nottinghamshire's Top 200 companies and was listed as the fifth highest, ranked by turnover, in 2018. It reported in that year staff numbers of 2,357 and a turnover of £958 million.
Its clients include Sainsbury's and Tesco.