An HMRC Minimum Wage Task Force has accused Iceland Foods of breaching national minimum wage (NMW) rules. It argues that the wages of staff setting money aside into the company’s Christmas savings club had technically fallen below the statutory pay threshold.
As a result of the scheme, HMRC has accused the retailer of underpaying staff around £3.5 million a year over a six-year period. In addition to the £21 million in backpay, Iceland could also face fines.
The scheme operates on a voluntary basis and is designed to help staff to put aside money – that can be withdrawn at any point – and is typically used at Christmas time. Monies are put into a ring-fenced account that the retailer says is controlled by an independent trustee company, whose directors are unconnected to its business.
The dispute has been described as “madness” by Sir Malcolm Walker, Iceland’s founder and chief executive. According to The Times, Sir Malcolm said that the supermarket was prepared to go to court over the allegations.
A spokesman for Iceland told Personnel Today: “We are naturally somewhat irked at being pursued at potentially huge cost for a technical breach of the minimum wage rules over a voluntary deduction which has already been repaid in full to all the participants.”
In a separate disagreement, Iceland’s uniform guidance has come under fire for stipulating store staff wear “sensible shoes” – warehouse staff are provided with safety shoes. As such, HMRC has reportedly told the retailer that staff buying their own shoes would have seen their pay drop below the NMW and wants the retailer to refund store staff for two shoe purchases a year at a value of £20 each, going back six years.
This is the latest case of an organisation potentially falling foul of the NMW law and coincides with the launch of a consultation into the rules regarding salaried workers and the operation of salary sacrifice schemes.
The consultation specifically looks at situations where employers feel NMW rules unfairly penalise them without generating any benefit or protection for workers, as well as the practical operation of salary sacrifice provisions and their effect on workers on the minimum wage.
