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?
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.
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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
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
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.
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