Iceland to fight HMRC over minimum wage dispute
04 January 2019
Iceland is facing a £21m bill from HM Revenue & Customs (HMRC), which alleges that the supermarket chain broke minimum wage rules with a Christmas savings scheme.
According to Economia, the Treasury Select Committee is to question HMRC over its threat to land Iceland with a £21m bill over a Christmas scheme which it runs for its employees. HMRC claims the Christmas Club is in breach of national minimum wage rules but the Committee wants to know why the department is investigating the Club when the scheme is voluntary, the money is ring fenced in a separate bank account controlled by an independent trustee company, and staff can get their money back in its entirety at any time.
HMRC argues that once the sums of money for the scheme are deducted from the employee’s pay, what is left is technically below the minimum wage, despite that fact the money eventually comes back to the employee.
The chief executive and founder of Iceland Foods has described the dispute with HMRC as "just madness". He intends to fight the HMRC claim.
According to BBC news, Iceland has also been told by HMRC that its policy on footwear breaches minimum wage rules as well. HMRC said that staff should be compensated for shoes bought for work, as Iceland had given staff guidance that "sensible shoes" should be worn. The guideline applies only to staff who work in stores, since warehouse staff are provided with safety shoes.
This is yet another example of an employer being caught out on an accidental technicality and why employers should not be complacent just because their hourly rates exceed the minimum rate.
In HMRCs most recent Employer Bulletin (December, Issue 75) they cited the top ten reasons why employers get caught out, which included:
It is really important that you are confident with your minimum wage compliance and processes and even if you feel you are, a review is never a wasted exercise.
We have the requirement from April 2019 to include on payslips the number of hours worked by the employee for which they are being paid.
We have to factor in the increase in minimum wage rates from 1 April this year and as demonstrated time and time again the media are 'all over it' when a company, especially a household name, is 'named and shamed' on GOV.UK for failing to pay the minimum wage.
Help is at hand, in a number of ways:
NMW consultation on salaried workers and salary sacrifice schemes
In December the government published a consultation which concerns the National Minimum Wage rules regarding salaried workers and the operation of salary sacrifice schemes.
The Policy team will publish a survey to gather member opinion on the proposals and will also be organising a Think Tank in the New Year. Please watch out for details through News On Line.