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Revenue to appeal against tronc ruling

31 October 2007 by
Revenue to appeal against tronc ruling

HM Revenue and Customs (HMRC) is to launch an appeal against a ruling that said non-cash tips could be counted towards the minimum wage.

In September, an employment tribunal threw out a case in which HMRC accused an unnamed London restaurant group of ripping off its employees by not paying the national minimum wage (NMW).

The tribunal ruled Revenue inspectors had ignored the fact that employees were receiving significant monies through a separate tronc.

Restaurateurs hoped this cleared up a final ambiguity in the Revenue's E24 (2006) tronc guidance, which had not made it clear if discretionary service charges and credit card tips counted as having been paid by the business - and thus towards NMW - if they came via tronc.

But HMRC is now appealing the decision to the Employment Appeals Tribunal, a move that has been criticised by Peter Davies, consultant at advisory firm Vantis, which has been advising the restaurant group.

"HMRC could be guilty of losing sight of the aims of the NMW legislation, which was to ensure a minimum level of earnings, and focusing too much on technical and legal points which have no real impact on how much people actually receive," he said.

But the Unite union, which picketed a number of London restaurants in September as it launched a campaign to get the law changed, welcomed the appeal.

It believes subsidising wages with tips is unfair because it means employees, in effect, take a pay cut when on holiday or off sick.

Dave Turnbull, Unite regional industrial organiser, said: "This appeal is extremely welcome, but even if the ruling is overturned the guidance is still open to interpretation. The basic law needs changing and we will continue to campaign for this."

In an online poll of Caterersearch readers in September, 85% thought tips should not be used to contribute to the NMW.

Union leaders launch campaign for fair tips >>
Tips can count towards minimum wage, finds tribunal >>
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National Minimum Wage increases today >>
Carluccio's slammed for paying less than minimum wage >>

Chris Druce

E-mail your comments to Chris Druce](mailto:Chris.Druce@rbi.co.uk?subject=Revenue to appeal against tronc ruling) here.

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