HR Industry News

HMRC wins tips ruling

— 17 June 2008 —

The High Court has ruled that tips should not count towards the minimum wage, siding with HMRC against Annabel’s restaurant.

HMRC had argued that payment via a ‘tronc’, which is an independent distribution scheme for tips, should not count towards the minimum wage. The restaurant had been taking tips from customers who paid by credit card and putting the tips into a ‘troncmaster’s bank account’ for distribution. However, the tips were being used to pay the minimum wage to the staff.

The ruling now forces restaurants to pay their staff at least the minimum wage, regardless of tips, gratuities, service or cover charges, so long as the tips are not paid directly through the employer’s payroll.

A spokesperson for the Department of Business said that it is “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.”

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