Industry leaders tell chancellor exclusion of tronc in furlough pay causing ‘real and serious hardship'
Industry leaders, including Hawksmoor's Will Beckett and Jeremy King of Corbin & King, have signed a letter calling on the government to include tronc, service charge and tips in furlough pay, saying their exclusion has caused "real and serious hardship".
The letter, spearheaded by WMT Troncmaster Services, asks for urgent consideration to be given to addressing the gap, which is estimated to have impacted some 750,000 hospitality employees.
It has been signed by more than 50 industry figures including Des Gundewardena, chief executive and chairman of D&D London; Peter Borg-Neal, chief executive of Oakmann Inns; Adam Handling, owner of the Adam Handling restaurant group; Tom Aikens, chef-patron of Muse restaurant in London's Belgravia; and Kate Nicholls, chief executive of UKHospitality.
The leaders have praised the furlough scheme, but argued that the decision to exclude what it has called "discretionary payments" is based on a mistaken understanding of how tronc systems operate".
The comments come after Beth Russell, director general of tax and welfare at the Treasury, told MPs: "The difficulty with tronc particularly is that in some cases tronc is notified to HMRC and in some cases it's not, so if we included it there would be unfairness in that approach as well."
The letter informs chancellor Rishi Sunak that the overwhelming majority of tips or discretionary service charges are paid by card, with tax deducted at source. It adds that there has been no expectation that the small amount of cash tips still given across the industry should be included in the furloughing scheme.
It reads: "For most hospitality employees in the most successful businesses, tronc can form anything up to 40% of their earnings. It is declared and taxed and, nowadays, counted as earnings by banks and mortgage providers. The decision to exclude these payments means that hospitality employees, through no fault of their own, are receiving furlough pay of 40% to 60% of their earnings rather than the 80%, which they expected and which those in other sectors of the economy are receiving. This is causing real and serious hardship and the universal credit is not an adequate remedy."
Guidance around the Job Retention Scheme, which sees the government cover 80% of furloughed workers wages up to £2,500 a month, confirmed tronc, tips and service charge would not be included at the end of last month.
Many industry figures have spoken out against the exclusion including D&D London chairman and chief executive Des Gunewardena, who told chancellor Rishi Sunak that the decision was "deeply unfair, discriminatory, and sends a clear message to restaurant staff in the UK that they are not valued".
More than 24,000 people have also signed a petition urging the government to reconsider.