Will your tip help those who served you well?

Apr 16 2008 by Peter McCusker, The Journal

DO you leave something on the table or in the communal pot at the counter? Will your own waiter or hairdresser receive the money you leave or will it be shared equally among all the staff?

At the heart of the issue lies the right of staff to be paid the national minimum wage (NMW), according to the Tourism and Hospitality Group (THG) at the Institute of Chartered Accountants in England and Wales. The group has come up with some pointers on tipping for staff, employers and customers.

“Workers have the legal right to be paid at least the NMW,” said Hartlepool-based Keith Thomas, a THG committee member.

“However, service charges, tips, gratuities and cover charges count towards NMW if they are paid to the worker through the payroll and are shown on payslips. Tips given directly to the worker by a customer do not.”

Mr Thomas added: “Money from a communal pot – or ‘tronc’ – paid directly to a worker does not count towards NMW. However, if the money from the tronc is passed to the employer and is paid to the worker through the employer’s payroll and shown on payslips then it will count towards NMW. It will also count towards NMW pay if the person administering the tronc operates PAYE on distributions and uses the employer to pass the net payments to each worker, if this is done through the employer’s payroll and is shown on the payslips.”

Meanwhile, payments that count for NMW purposes can be payments in respect of gratuities and therefore not liable to National Insurance contributions.

“It’s a lot easier in Japan, where tipping is never, ever done,” said Mr Thomas.