Iceland’s Christmas savings scheme broke NMW rules, says HMRC

The chief executive of frozen food retailer Iceland said he will fight HM Revenue & Customs (HMRC) over a wage dispute.

The tax office claims a Christmas savings scheme offered to staff by Iceland and rules relating to suitable shoe attire broke minimum wage rules.

But Iceland founder and CEO Sir Malcolm Walker has branded the probe as “madness”, asking HMRC to use public funding more wisely.

The dispute relates to the retailer’s Christmas savings scheme, which saw staff voluntarily divert a portion of their wages into a separate savings account. The savings could then be taken over the festive period to help cover Christmas expenses.

However, HMRC says this breaks National Minimum Wage (NMW) rules, alleging the underpayment of around £3.5 million a year over a six-year period. It has also said the retailer should compensate staff for the cost of footwear, after Iceland asked workers to wear “sensible shoes” within its stores.

If HMRC was successful in its claim, Iceland could be forced to pay a fine worth double the amount of the alleged underpayment.

An HMRC spokesperson said: “HMRC does not comment on individual cases. All businesses, irrespective of size or business sector are responsible for paying the correct minimum wage to their staff.

“HMRC won’t hesitate to take action to ensure that workers receive what they are legally entitled to.”

Commenting on the case, Keith Hann, Iceland’s director of corporate affairs, said: “We hope that HMRC might see sense.”

He added that the Christmas club had “only become an issue as the differential between our pay rate and the minimum wage has narrowed”.

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