Tribunal decision could help bar and restaurant workers

Bar and restaurant workers could benefit from a ruling by the Employment Appeal Tribunal (EAT) about payment of the minimum wage.

The ruling means employers have to pay staff the minimum wage regardless of tips and service charges, provided that such tips are not paid directly through the employer’s payroll.

The case before the Tribunal involved a restaurant and HM Revenue and Customs (HMRC).

The issue was whether tips distributed to staff via a tronc scheme could count as payment towards the minimum wage. HMRC argued that they could not. Troncs are a system of pooling and distributing tips in the service industries. In this case, the tips were paid to the restaurant but then paid into a troncmaster’s account to be distributed to the staff.

The terms of the scheme, such as how much should be paid and to whom, were determined between the staff and the troncmaster rather than between the staff and the employer. The EAT found in favour of HMRC and ruled that in these circumstances, the money distributed is not paid by the employer through his payroll and so cannot be taken into account for the purposes of the National Minimum Wage calculation.

It means employers have to pay the minimum wage regardless of money staff may receive through their tronc scheme.