...says the Chief Executive at Iceland Foods, who have been told by HMRC that a Christmas savings scheme creates a breach of the National Minimum Wage legislation. The “Christmas club” has been operating for decades and employees make a voluntary contribution from their wages and receive all of the money back to help pay for Christmas. Iceland have vowed to fight the finding which could cost up to £21m. HMRC said that staff should also be compensated for shoes bought for work, as Iceland had given staff guidance that "sensible shoes" should be worn.
Whilst the dispute over the Christmas savings scheme seems unfair the issue of employees having to pay for their own clothes to comply with certain dress policies is a common mistake identified by HMRC and will continue to be an issue for employers who don't take those costs into account when ensuring that their workers receive the National Minimum Wage in full.
I have seen a significant increase this year in clients being asked by HMRC to explain deductions from wages. Areas where an adverse finding can arise include deductions for uniform (even simple requirements to wear a certain colour such as black and white for restaurant staff can fall foul), recoupment of pay for training or CRB check fees, security deposits and not paying the worker in full for their shift if there is any clocking in, handover or extra time that is worked in practice but not included in the hourly rate. Another risk area is agreeing to salary sacrifice without calculating the impact this has on NMW.
Fines run up to a 200% penalty plus being 'named and shamed' for breach of NMW so it is worth thinking about all wages and costs related policies and practices to make sure that there is no risk in the event of a HMRC audit.