Tips no longer part of wage

Another long-running legal saga appears to have been resolved last Friday when the Employment Appeal Tribunal ruled that tips from customers paid into a "tronc", or staff pool, could not be used to top up the national minimum wage.

The important point here was that often the money goes through the employers' system first, especially if it is paid by the customer by way of his or her credit card.

Whether it is a paper slip or one of the more modern electronic machines, the customer will add the "voluntary" tip to the total bill, which the card company pays direct to the pub or restaurant.

It therefore goes into the pub's own income and the contention was that it was then "paid out" to the staff and could thus be counted as part of their overall salary.

This has clearly long been a bone of contention between low-paid workers and their employers, but even after this judgement the situation is far from straightforward, and great care will have to be taken by all licensees who are involved with any form of tips paid to staff.

Clearly, a direct cash tip to a staff member will not be part of this ruling, as it does not affect either the wage or other issues such as PAYE or National Insurance. But where the money comes in to the operator and then goes out again, there will be more complicated calculations. It is hoped that HM Revenue & Customs will revise their guidance leaflet as soon as it is possible.