The Employment Appeal Tribunal recently determined that tips, gratuities, service or cover charges are not to be included in minimum wage calculations, provided that the contributions are not paid directly through the employer’s payroll.
The ruling concerned a number of bars and restaurants that distributed tips to staffs through a tronc system, where the gratuities were passed to a member of staff – the troncmaster – who then had the responsibility of distributing them to other staff members. While the businesses argued that the tronc payments were in effect coming direct from the employers, the tribunal decided that, as the funds transferred to the troncmaster could not be recalled by the employers and they had no say over how they were distributed, the tronc funds did not belong to the employer, and so could not be counted as “wages” in any National Minimum Wage calculations.
Although the tronc system of tip distribution is not often used by employers, this case does clarify an important point of employment law relating to the nature and function of the National Minimum Wage. It also illustrates how important it is to get clear, authoritative legal advice when it comes to complex matters of employment law, whether you are an employer or an employee.
Ashby Cohen solicitors specialise solely in UK employment law, and have many years of experience in negotiating the vagaries of this broad and complicated subject. Advising both employers and employers in all areas of employment law, Ashby Cohen has built up a level of expertise that few other solicitors can match. Visit our employment law web site for more information on the services we provide.
