Iceland have become the latest high street retailer to make the news for apparent national minimum wage (NMW) failures.
Their biggest failure? Operating a Christmas savings club for their staff.
The employees were offered the chance to voluntarily forego some of their salary which would be paid into a separate account. This was overseen by an independent trustee company and then returned to the employee whenever they wished. Iceland received no benefit from this arrangement.
HMRC are arguing that by not receiving their full salary on the day they were paid, the employees were paid below the minimum wage. It is estimated that over a six year period the total underpayment could be as much as £21 million even though there was no ‘real’ underpayment when looked at over the year.
There will also be penalties which could, in some instances, be as much as 200% of the underpayment.
Their second apparent failure was to ask their staff to wear ‘sensible shoes’. HMRC argue that when the employee purchases a pair of shoes a deduction is due from their salary and an underpayment arises for that week. This follows similar arguments made against Wagamama and TGI Friday last year who were both fined significant amounts.
Employers paying at or just above NMW are easily caught out by the details of the NMW regulations which go well beyond the base pay figures. Policies and practices can result in breaches and serious fines even for something as seemingly innocuous as trying to help your employees save for Christmas.
We would recommend that reviews of NMW compliance and procedures are undertaken regularly to ensure that you do not fall foul of these regulations, particularly in light of the potential press interest and negative publicity that could arise and the financial implications in an ever changing and challenging landscape.
View the original article here.
Written by Scott Campbell – Tax Consultant at PKF Francis Clark