HM REVENUE AND
CUSTOMS News Release (NAT 37/09) issued by COI News Distribution
Service on 7 May 2009
Bar and restaurant
workers have today been given a helping hand by the Court of
Appeal in their fight for fair pay. The court ruled in HM Revenue
& Customs' favour by upholding current national minimum
wage legislation relating to tips, gratuities and discretionary
service charges in the case of Annabel's restaurant and night
club and others.
The judgment confirmed that employers must pay their staff at
least the national minimum wage regardless of any tips,
gratuities, service charges or cover charges, providing they are
not paid by the employer to workers through the employer's
payroll. This means that Annabel's and others must now pay
over £125,000 in arrears to its workers.
HMRC had argued that payment via a 'tronc' (an
independent distribution scheme) does not count towards the
national minimum wage.
The Court determined that where restaurant or bar service charges
are paid by the customer to the employer, but are then paid into a
'troncmaster's' bank account for distribution in
accordance with a 'tronc' scheme agreed between the
troncmaster and workers, the sums distributed to workers are not
"paid by the employer" and so cannot be included in
national minimum wage pay.
Rt Hon Stephen Timms, Financial Secretary to the Treasury said:
"The Government's priority is to ensure that all
workers are paid at least the national minimum wage. I am
extremely 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."
HMRC vigorously enforces the minimum wage across all employment
sectors including the catering and hospitality industry. Anyone
who thinks they are not being paid national minimum wage rates
should contact the confidential NMW Helpline on 0845 6000 678.
Notes for editors
1. In June 2008 HM Revenue & Customs (HMRC) won an Employment
Appeal Tribunal against the restaurant/club Annabel's and
others. The case involved the calculation of national minimum wage
pay where an independent tronc scheme was in operation. Troncs are
a system of pooling and distributing service charges, tips and
gratuities to staff in the service industries. Under specific
circumstances, payments made as tips, gratuities, service charges
and cover charges may count towards national minimum wage pay.
However HMRC argued that tips, gratuities and voluntary service
charges paid to workers by a troncmaster via a tronc did not count
towards national minimum wage. Annabels and Others were given
leave to appeal against the ruling.
2. The case was heard at the Court of Appeal on 15 January 2009.
The Court found in HMRC's favour and the judgment was handed
down today (7 May 2009).
3. The judgment is legally binding and sets a precedent for other cases.
4. The National Minimum Wage Act 1998 has now been in force for
ten years. HM Revenue & Customs has operational responsibility
for enforcing the minimum wage and has operated a helpline and
network of compliance teams since 1 April 1999 to fulfill that
role. The Department for Business, Enterprise and Regulatory
Reform (BERR) is responsible for national minimum wage policy.
5. The government announced yesterday that using tips to make up
staff pay to minimum wage levels will be outlawed from October
this year, giving thousands of workers fair wages, ensuring a fair
and level playing field for employers and boosting consumer
confidence in the use of tips. For more information on the
government's plans, visit: http://nds.coi.gov.uk/environment/fullDetail.asp?ReleaseID=400613&NewsAreaID=2&NavigatedFromDepartment=True
Issued by HM Revenue & Customs Press Office
Press
enquiries only please contact:
Sara Gaines
Tel: 020 7147
0394
Website: http://www.hmrc.gov.uk
or
Alex Hamilton
Tel: 020 7215 5976
Website http://www.berr.gov.uk