Restaurateurs will not be forced to pay out thousands in back payments after a tribunal threw out an HM Revenue & Customs claim that a London restaurant group had ripped off its employees by not paying them the National Minimum Wage (NMW).
At a hearing at the Central London Employment Tribunal this week, the Revenue claimed the business was at fault between 2000 and 2003 because it had only paid employees £3 to £4 per hour, less than the NMW.
However, inspectors ignored the fact that employees were receiving significant monies through a separate tronc system, which when taken together meant some waiting staff were earning enough to pay 40% tax.
The tribunal ruling removes a final ambiguity in the Revenues’s E24 (2006) tronc guidance, which had previously not made it clear if discretionary service charges and credit card tips counted as having been paid by the business – and thus towards NMW- if they came via the tronc.
This ruling says they do.
It also means that a number of restaurant businesses that were facing the same charge and the prospect of legal bills and costs running into the thousands of pounds, at last have closure and can concentrate on their businesses.
Peter Davies, consultant at advisory firm Vantis, instructed David Griffith-Jones QC to represent the victorious restaurant group.
“This is a victory for common sense,” he said. “It was a classic case of arguing form over substance to suggest that an employee earning enough to pay 40% tax had somehow not received their minimum wage and was being exploited just because a tronc was in place.”
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Read more about tronc here >>
By Chris Druce
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