An employment tribunal appeal judge has ruled that tips cannot make up part of an employee’s minimum wage.The decision is good news for the UK's restaurant and bar workers.

HMRC had argued that money paid to restaurant and bar workers through a tronc – a system for pooling and distributing tips – cannot contribute to minimum wage payments.

Finding in HMRC’s favour, the judge’s ruling means that employers have to pay their staff at least the national minimum wage irrespective of any tips, gratuities, service or cover charges, provided those tips are not paid directly through the employers’ payrolls.HMRC argued that payment via a 'tronc' (an independent tips distribution scheme) does not count towards the National Minimum Wage.

Handing down the judgement, the judge said that where restaurant or bar service charges are paid by the customer to the employer, but are then paid into a troncmaster’s bank account for distribution, the money is not “paid by the employer” for the purposes of being included in any minimum wage calculation.

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