In a step toward fairer tips for hospitality staff, HM Revenue & Customs have won an appeal against Annabel’s bar and nightclub for the fair distribution of tips, as long as they are paid through an employer’s payroll.
The judge found that Annabel’s was topping up its staff’s wages with tips to meet National Minimum Wage, but was doing so through an independent ‘tronc’ system. He ruled that as the tips were not actually being ‘paid by the employer’ for the purposes of being included in any NMW calculation, they were not fair.
This now means that if any employer wants to use a ‘tronc’ system to distribute tips, they will have to pay at least the NMW to staff first. However, employers can still use tips to raise staff wages to NMW, so long as they go through the payroll.
Denise Gaston of HMRC said: “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."
At the time of writing, 87 MPs have put their signature to the Early Day Motion for the Fair Tips Charter Campaign.
A spokesperson for Unite, the union behind the fair tips charter, said: "Obviously it’s a step in the right direction for fairer tips, but the government still needs to move to close the loophole in the minimum wage law.”
HMRC strongly urges anyone who feels they are not being paid NMW, to call their helpline on 0845 6000 678.