Retail giant, Iceland Foods, have been accused by HMRC of breaching national minimum wage rules by operation of a Christmas saving scheme offered to its employees.
It is reported that the voluntary scheme allowed employees to have sums deducted from their wages which were then held in a separate, ring fenced account, returnable to employees upon their request and usually around Christmas.
HMRC claim that the scheme operated in contravention of national minimum wage legislation as it left some employees with wages that fell below the national minimum wage once their contributions to the scheme had been deducted. HMRC calculate that the underpayments amount to £21 million and in addition to this the company may also face a fine of up to double the amount of the alleged underpayment.
HMRC have also reportedly ordered Iceland to compensate workers who were required to buy appropriate footwear for work, in accordance with the company’s guidance. This is because the costs of the shoes should have been treated as a deduction when calculating the workers national minimum wage. Iceland supposedly did not do so which resulted in the workers receiving below national minimum wage in the weeks that the shoes were purchased.
Iceland Foods has said it will challenge HMRC's claim and it is understood the Treasury Select Committee will be questioning HMRC’s decision to investigate the supermarket chain. Clearly, this is not the last that we will hear about this case and we await the outcome with interest.
Matthew Potter comments:
“This case will be concerning to employers given that Iceland’s scheme appears to be entirely voluntary for employees, not for Iceland’s benefit and offered in good faith with the intention of assisting its employees. HMRC appear to be taking a tough stance in their policing of the National Minimum Wage legislation and drawing little distinction between complex technical breaches and minor administrative errors.
With potential fines of up to 200% of arrears for underpaying staff, and the added possibility of criminal prosecution and negative publicity, employers should review their benefit packages and the deductions that they are making to ensure that they are not falling foul of the national minimum wage legislation in light of this case.”