| Court victory on tips for bar staff |
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| Written by Adrie van der Luijt | |
| Friday, 13 June 2008 | |
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The High Court has ruled in support of national minimum wage legislation relating to tips.
The decision in favour of HM Revenue & Customs, in a case relating to Annabel's restaurant and night club, means that employers have to pay their staff at least the national minimum wage regardless of any tips, gratuities, service or cover charges, so long as the tips are not paid directly through the employer's payroll. HM Revenue & Customs argued that payment via a 'tronc' - a system of pooling and distributing tips to staff in the service industries - does not count towards the national minimum wage. Troncmaster The judge determined that where restaurant or bar service charges are paid by the customer to the employer, but are then paid into a 'troncmaster's' bank account for distribution in accordance with a 'tronc' scheme agreed between the troncmaster and employees, the sums so distributed to employees are not "paid by the employer" for the purposes of being included in any national minimum wage calculation. Denise Gaston of HM Revenue & Customs said that priority is to ensure that all workers are paid at least the national minimum wage. “We are very pleased that the court has recognised HMRC's commitment to ensuring that tips are correctly and fairly distributed to the people who earn them. This is good news for bar and restaurant workers across the UK,” she added. A spokesperson for the department for business called it essential that all UK workers receive the pay they are entitled to and that everyone earns at least the national minimum wage. “Equally, it's important that tipping is fair and we are already examining what options are available to help ensure transparency,” he added. Specific circumstances In October 2007 HM Revenue & Customs lost an employment tribunal appeal case against the restaurant and club Annabel's. The case involved the interaction between national minimum wage and troncs. Under specific circumstances payments made as tips may be included as part of the payroll by the employer and count toward national minimum wage. Annabel's have 14 days to seek permission to appeal the judgment. Related articles Related links |
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