The Employment Appeal Tribunal (EAT) has ruled in a recent case that any gratuities paid through a “tronc” system are not wages paid by the employer and therefore cannot count for the purposes of satisfying an employer’s obligations under the National Minimum Wage Act.
At present the “tronc” system means that employees effectively distribute their own tips. As this is not subject to the employer’s normal payroll the EAT has ruled it cannot offset any liability to pay the minimum wage..
It remains to be seen how far reaching this decision becomes in practice. Employers may simply insist on tips being paid through the payroll which does, and would, continue to satisfy the requirements under national minimum wage legislation.
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