COMPLIANCE
any amount at all, including to cover credit card fees and bank charges. Any amount deducted by third parties must be made good by the business. Only statutory deductions via payroll, so income tax, employee National Insurance (NI) (if no tronc is used) and employee pension contributions, are permitted. Where no tronc exists, the cost of employer NI and pension costs must be borne by the business. Timeframes Monies must be paid to workers by the end of the month following the month of receipt, so a tip paid on 3 December must be paid no later than 31 January. Multi-venue operators Tips must be paid to staff working at the venue where the money was generated and cannot be pooled or shared with other sites. There’s an exception which allows money generated in a trading site to be paid to staff working at ‘non-public’ places of business such as a head office, central production unit or dark kitchen. Agency workers Agency workers will be entitled to receive a share of tips on the same basis as directly employed staff and cannot be excluded simply because they work for an agency. A business must either pay the agency worker via their payroll or pass the money to the agency, who must then pay it to their worker in full by the end of the following month without deductions (apart from statutory payroll deductions). Agency workers will have the same rights to information as directly employed staff. Should an agency worker believe they haven’t been treated in line with the legislation then they may bring a claim against the hospitality business as well as their agency. This means a business will need to be certain that any agency used is fully complying with the new rules. Contractual changes It won’t be possible, even by agreement, to reduce a worker’s wages in exchange for tips, a specific share of tips or a greater share of
tips. This will affect businesses who currently allocate tips themselves (which are classed as ‘wages’) and who might subsequently wish to set up an independent tronc system. This will need to be implemented in advance of the new rules taking effect. Obligations on businesses A business will now have a legal duty to ensure 100% of tips are paid to workers within the specified time, in a manner which is fair. The details of how this is done must be in writing and a copy given to all workers (including agency workers) in sites where tips are generated. Workers will be entitled to see how much money has been generated in tips at their place of work, although not how much individual members of staff have received. Tronc systems It will continue to be up to businesses to decide if they wish to have independently managed tronc systems. If so, these will automatically be designated as ‘fair’, and a business won’t be responsible for how the troncmaster shares or allocates those funds, although they will be required to step in if they become aware of the tronc being operated in an unfair manner. The taxation treatment of tronc systems isn’t changing and the exemption from NI still applies if operated correctly. Where a business chooses to manage tips directly without a tronc system they will remain subject to NI contributions and additionally, the business will now have to provide written details to their workers of how they ensure this is dealt with in a fair manner.
records, or refuse to give them to employees, will face being taken to an employment tribunal. Tribunals can order businesses to amend unfair tip allocations they have made (but not those made by independent troncs) and can issue orders of up to £5,000 for failure to keep or provide records. Orders can be given, not just in respect of a worker who brings a claim, but also in respect of any other similarly affected worker. Code of Practice The government has also published a draft statutory Code of Practice which is subject to consultation until 22 February 2024. The Code seeks to define what constitutes ‘fair’ and ‘transparent’ and businesses must have regard to this when deciding on their arrangements. It provides details of the principles which can be used in the awarding of tips, such as job role, performance, length of service and level of basic pay and states that these principles should be ‘clear’, ‘objective’, ‘fair’ and ‘reasonable’. Businesses should seek the ‘broad agreement’ of staff through consultation, although the Code does not define the precise form that consultation must take. Employment tribunals will use the Code to decide on the fairness of arrangements brought before them by workers. Businesses must plan ahead and pay close attention to the draft Code of Practice. Operators who don’t currently run independent tronc schemes should consider introducing one now, as the legal presumption of fairness that automatically applies will be important in the new landscape. The Act should: l help in stopping the minority of businesses who have continued to behave poorly over tips l provide protections for workers in those businesses l increase consumer confidence that when they choose to pay tips and service charges that they do indeed go to staff. Despite the disruption for some, this should be welcomed and will hopefully provide a more certain and stable legal framework going forward. n Peter Davies is the managing director of WMT Troncmaster Services Ltd and can be contacted on 01727 838255 or info@wmtllp.com .
Rights for workers Workers at all sites where tips are
generated must be given a copy of the written policy on how tips are dealt with and will be entitled to ask for details of the amounts collected at any site they have worked at. Where no tronc exists, they will also be able to ask for the records showing how the business ensures monies are dealt with fairly. Businesses who fail to keep sufficient
"Agency workers will be entitled to receive a share of tips on the same basis as directly employed staff and cannot be excluded simply because they work for an agency"
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| Professional in Payroll, Pensions and Reward |
Issue 97 | February 2024
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