Who gets the money from tips?
As a restaurant customer you may wonder who gets the money from tips. Many employees who work in the hospitality industry rely on tips from customers. Still more only receive the minimum wage.
Customers worry that their act of generosity might not reach the intended person, especially where card payments are concerned. And they wonder whether the kitchen staff see any of it.
Many restaurants use a system known as the ‘tronc’, in which a ‘tronc master’, who is sometimes a member of the management, shares them out. The benefit of a tronc system is that no national insurance is payable on tips that don’t pass through an employer’s hands.
Employers in hospitality often ask us if they can pay under the minimum wage and make up the difference with tips. The answer used to be yes but is now no.
What if an employer does not pay over tips to the staff? Can they sue under the Deductions from Wages provisions? The answer to this depends on the way the employer pays them, specifically the level of discretion in their distribution. If it is entirely within the discretion of the employer then the worker cannot show a contractual right to a x% of tips, and such a claim will fail.
It helps workplace relations and reduces the risk of employment claims if an employer has a policy on tips including information such as:
- How tips are distributed
- Whether a tronc system is in place and who is the tronc master
- Are cash and card tips are treated differently
- What the employer deducts from tips
- What happens to tips during holiday and sickness absence
The Government has a code of practice, approved by the unions.
Finally, there are hopes for clarity and fairness going forward as the Johnson government has announced plans to ensure that tips left for workers go to them in full, in the Employment (Allocation of Tips) Bill. However parliamentary uncertainty caused by the Brexit issue means that this is unlikely to make its way into law any time soon.
Image used under cc courtesy of Adrian Clark
By Johnmark Aboderin