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HMRC have won their case in the Court of
Appeal as to the treatment of tips and
service charges for bar and restaurant
workers. The court ruled in favour of
HMRC in the National Minimum Wage (NMW)
legislation case relating to tips,
gratuities and discretionary service
charges. The case concerned Annabel's
restaurant and night club and others.
The ruling confirms that employers must
pay their employees at least the NMW
without taking into account tips,
gratuities, service charges or cover
charges, unless they are paid to employees
through the employer's payroll.
The case means that Annabel's and
others must now pay over £125,000 in
arrears to their employees.
Annabel’s had operated a ‘tronc’ scheme
which HMRC had argued did not count
towards the necessary payment of the NMW.
A ‘tronc’ scheme is sometimes used 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 court decided that where a ‘tronc’
scheme is used the amounts distributed to
workers are not paid by the employer and
therefore could not be included in pay for
NMW purposes.
Rt Hon Stephen Timms, Financial
Secretary to the Treasury, said:
"The government's priority is to ensure
that all workers are paid at least the
national minimum wage. I am extremely
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."
Internet link:
Press release |
