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Ben Jones
Ben Jones, UK Lawyer
Category: Law
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Experience:  Qualified Solicitor - Please start your question with 'For Ben Jones'
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I work renowned restaurant St, Smithfield in London. I have

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I work for the renowned restaurant St John, Smithfield in London. I have a verbal contract made at the time of my employment with the then manager whom no longer works for the company. They have always run a tronc system to distribute credit card tips amongst the staff, part of my pay being made up of this. We have had various tronc masters from within the company, now they have decided to use an independent company to do this. We have had no consultation on any changes being made to the distribution of the tronc. The new tronc master has asked the staff to sign a contract confirming they wish to be a member of the St John tronc system, with it's new rules of the scheme. If we do not sign we will only receive minimum wage. As far as the status quo is, I have always been part of the tronc committee. In the past the staff have always been consulted when changes have been made to the distribution of the tronc, coming to an agreement with the then tronc master.The staff are unhappy about the new St John rules of the tronc. The company are saying they will not be deciding on how the tronc is divided so they and we will not be liable to pay NI contributions on it. The GM will be advising the tronc master on how to pay out from it. The bot***** *****ne is the company wish to be seen as having no influence on the divvying up of it, but blatantly this is not the case. They have offered us an amount per hour that is not guaranteed though, the tronc master will be paid for out of the tronc, money will be held back for quieter times, supervisors pay will be topped up from it, and as never seen before the office staff will also receive a cut. Is it totally legal the the tronc master can distribute it as he sees fit with absolutely no say from the staff, he works for St John, not for us, even though he will be paid from the tronc. This just seems outlandish. It is also part of the new rules that we cannot suggest a cash tip would be preferable as this may result in disciplinary action. Any help you can give me will be hugely appreciated. Thank you, Claudia.
Submitted: 8 months ago.
Category: Law
Expert:  Ben Jones replied 8 months ago.

Hello, my name is***** am a qualified lawyer and I will be assisting you with your question today. How long have you been there for?

Customer: replied 8 months ago.
Hello Ben, This time about 3 years, overall since 2003 about 8-9 years. thanks
Customer: replied 8 months ago.
For Ben Jones, hello, I have worked for them for 3 years this time, but over all since 2003 8-9 years.
Expert:  Ben Jones replied 8 months ago.

Thank you. The issues with tis and tronc systems is a notoriously grey area because no specific laws or legislation deals with it. There are some rules on the tax treatment of such payments but this is not the issue here.

As far as tips are concerned, there are usually two ways for customers to pay tips to staff – either by giving them cash or by adding them to a credit card payment. Each is treated in a different way.

Tips which are voluntarily paid by customers by adding an extra amount to a credit card payment become the property of the employer. As such, the employer is allowed to keep this money but may choose to share it out amongst staff. If it is shared out amongst staff, it should be paid on top of their wages and can’t count towards ensuring the staff get paid at least the National Minimum Wage.

If a service charge is compulsory, i.e. it is added automatically to the customer's bill, it also belongs to the employer who can distribute it as they wish. However, sometimes a contract of employment says that staff are entitled to a share of the service charge. If there is a contract of employment and it says they are entitled to a share of the service charge, they must be paid their share of the charge and the employer cannot change the way it is shared out unless the affected employee agrees.

So the issue is that if you do not have a formal agreement which you can rely on to guarantee you a share of the service charge, how these payments are divvied up will be down to the employer. As mentioned the money belongs to the employer so they can decide who deals with it or how it is distributed.

A consultation was recently launched by the Government to look into the practice of tips and service charges and eventually it may lead into tightening up of the laws but as it currently stands it is very much down to the employer as to how this is dealt with.

There is still nothing stopping you from getting together and making this into a group complaint, use the grievance procedure if needed. Coming together may be better than just individuals trying to challenge this.

I hope this has answered your query. I would be grateful if you could please take a second to leave a positive rating (3, 4 or 5 stars) as that is an important part of our process and recognises the time I have spent assisting you. If you need me to clarify anything before you go - please get back to me on here and I will assist further as best as I can. Thank you

Customer: replied 8 months ago.
Thank you for your response Ben, I'm aware of the things you have mentioned already. What I'm trying to find out is if my employer does not wish to pay NI and the staff also, they are not allowed to have an influence on how the tronc is divided. So in that case who has the power as it were. As what they are doing is getting the GM to advise the tronc master on how it is divided, so in being staff are not being offered any say in it. Is it legal that the tronc master can do as they please? So basically the company own the tronc, choose not to control it on paper, but the GM who works for them tells the tronc master how to do it!
Customer: replied 8 months ago.
I've hit a stone wall on any one being able to advise me on who has the right to decide how the tronc is divided ,when the company choose not to be involved in it's distribution. Would it not be a member of the tronc committee? Am I already a member? I have been receiving tronc since I first started there, and usually the staff have a say in how it's divided. I want to know who has the legal right to how it's divided up when choosing not to have to pay NI on it. My employer could choose to have their wife do it if they so wish by law, so surely that would be only in their interest in avoiding NI but still getting away with influencing how it's divided. Thanks.
Expert:  Ben Jones replied 8 months ago.

Yes I am not surprised, it is not that clear in law. HMRC devises the rules applicable to NICs and whilst it gives specific examples of when an employer will be exempt from NICs, it only means that if they do not follow these rules they may become liable for such charges. So in effect the tronc system can be run as the employer chooses but if they do not adhere to the rules set out by HMRC, they may then become liable for NICs. More details here

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/430329/E24_2015_v1_0.pdf

Customer: replied 8 months ago.
Ben, I know this is a grey area and I appreciate your time in this, but I don't know where else to turn. I have contacted Accas, HMRC, legal charities, law firms, and no one seems to be able to answer my questions. As things stand St John is doing what is required by law of them with regards; they own the tronc funds, choose not to decide how it's divided, so we and they are not liable to pay NI on it, they have appointed an independent tronc master, as is legal, but no one can tell me who then legally can decide on it's distribution? Previously a member of the restaurant staff was paid £80 a month to do it, agreed by the staff in receipt of tronc, but now the new tronc master is getting £400 per month. What if in the future he decides his fee is £1,000 a month? If by law the company does not make any influence on it's division who does then??? That's what I can't seem to get to the bottom of. Please help!!!
Expert:  Ben Jones replied 8 months ago.

it is the tronc master who makes the decisions on the distributions of the money. That is one of the powers they get in their position. So the employer will decide who the tronc master is and appoint them in that position, then entrust them with the distribution of the tips. If the fees are too high then the employer does not have to use them and that could be a decision which they reach after pressure from the employees

Customer: replied 8 months ago.
Okay Ben, thank you for your help, I know a lot of my questions have probably been difficult to answer ,as I'm becoming more aware the government and law are very cloudy in this area. One last question, Accas told me a verbal agreement was as legally binding as a written one, it just would be harder to prove in court, do you think that's so? Thank you so much for your time, have a great day. Claudia.
Expert:  Ben Jones replied 8 months ago.

Yes that is true - verbal agreements can be just as legally binding as written ones but in these cases it is your word against the other party's. Also all agreements are subject to change, even with a formal written contract in place an employer could try and introduce changes - not necessarily done easily but it can happen. Also the other difficulty may be trying to show that the tronc arrangements formed part of your verbal contract - that could be argued to be separate t it and without anything in writing to confirm that, it could become a difficult argument. In any event, these things may ultimately only be resolved by a court or tribunal so if you cannot find the answer anywhere, that would be the ultimate place where a legally binding decision can be made.

I would be grateful if you could please quickly rate my answer by selecting 3, 4 or 5 starts at the top of the page - it only takes a second to do and is an important part of our process. I can still answer follow up questions afterwards if needed. Thank you

Ben Jones, UK Lawyer
Category: Law
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Experience: Qualified Solicitor - Please start your question with 'For Ben Jones'
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