Iceland facing £21m bill over Christmas savings scheme

Iceland could be hit with a £21m fine as the HMRC has said the supermarket’s Christmas savings scheme meant its workers were being paid less than the minimum wage.

The scheme allows workers to set aside a proportion of their weekly wage to be claimed back later, but CEO and founder Malcolm Walker described the claim as “just madness” and said he intends to fight it.

Iceland’s alleged underpayment, first reported by The Times, is said to be £3.5m a year for six years, despite the fact that staff chose to participate in the scheme and all funds were returned when requested.

The supermarket also said it had been told by HMRC that its policy on footwear breached minimum wage rules. HMRC wants Iceland to refund workers for two shoe purchases per year with a value of up to £20 each.

The supermarket’s policy tells staff that “sensible footwear” must be worn, however HMRC said staff should be compensated for shoes bought for shoes bought for work. The guidelines only apply to those working in Iceland’s stores as warehouse staff are provided with safety shoes.

An Iceland spokesperson told Retail Sector, the company was “not planning to do anything other than to continue our existing conversation with HMRC in the hope that they may be persuaded to adopt a more reasonable approach to the technical infringement of the minimum wage rules”.

HMRC said it did not comment on individual cases.