Iceland to fight £21m claim that it pays staff less than the national minimum wage

Iceland could be hit with a £21m fine after HM Revenue and Customs ruled that its Christmas savings scheme technically results in staff being paid less than the national minimum wage.

The supermarket disputes the finding, which relates to a scheme whereby the company allows employees to voluntarily set aside money from their weekly wages over the course of the year to help cover Christmas expenses.

However, HMRC said the scheme means the supermarket is technically paying staff less than the minimum wage, with an alleged underpayment of around £3.5m a year for six years, according to the Times.

HMRC also said the retailer should compensate staff for the cost of footwear, after employees were told to wear “sensible shoes” to work.

Iceland’s chief executive and founder, Sir Malcolm Walker, told the Times that the company would fight the dispute in court if necessary, calling the claim “just madness”.

CityAM has contacted Iceland and HMRC for comment.