From 1st October 2009 the National Minimum Wage will increase as follows:
- From £5.73 - £5.80 for workers 22 years and above;
- From £4.77 - £4.83 for workers 18-21 years;
- From £3.53 - £3.57 for workers 16 and 17 years;
Employers in the hospitality industry should be aware that from 1st October 2009 it will be illegal to use staff tips to bring pay up to the National Minimum Wage.
The recent case of Annabel’s (Berkley Square) Ltd & others v HMRC held that tips and gratuities paid through a Tronc System did not count as wages for the purpose of the National Minimum Wage
A Tronc is a system for pooling and distributing tips, gratuities or service charges in the hospitality industry. The appointed Troncmaster then distributes the tips to the employees.
The Employment Appeals Tribunal held that the common intention was that tips paid to the employer, via card, cheque etc by a customer would eventually be paid to the employees. The employer had no legal right or control over the money paid into the Tronc account and only the Troncmaster could decide how the money would be distributed.
The cumulative effect of this decision is that monies received by staff were not paid by the employer and therefore it could not count as part of the employee’s wages for the purposes of the national minimum wage.
An industry code of best practice is expected to be introduced by government requiring employers to make clear how tips will be distributed so that customers know where their money is going.
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