The law may have changed here but I think that this is actually illegal:
A spokesperson for Pizza Express said that its admin charge was to cover the cost of running a “tronc” – a standard pay arrangement used to distribute tips among staff. “We went to great lengths to set up this tronc system which is chaired by a troncmaster and run by a committee of waiters and pizzaiolos, who independently decide how tips made by electronic card payment are subsequently distributed between front and back of house restaurant team; a system run by employees for the employees,” she said.
Tips (as it used to be at least) which are distributed purely by the employees have certain advantages: they don’t pay NI or VAT. But, the flip side of this is that the company, management, cannot have any of it: it belongs to the employees.
If management is taking a slice then that money, obviously, does not belong solely to the employees. Thus it should be paying NI and VAT.
Any sensible management, seeing that wedge appearing between gross income and net for the waiting staff will therefore happily swallow the couple of percent that the credit card companies charge for tips on cards.
I left a job over this once, back in the day.
People tip in Pizza Express? I never knew that. What for?
Pendentry, it has never been _illegal_ to grab a slice of the tips money.
However, before 2005, any deduction was sufficient to make it “earnings”. HMRC web page.
However, 8% (or even 10%, from the article – but it is the Guardian) seems like an unjustifiably large proportion.
In general, this sort of behaviour is why, except in the USA where anything else confuses them terribly, I refuse to put the tip on the card and drop some cash instead.
Pizza Express story:
Took a Brooklyner, Italian-American, to the one off of Oxford Street because there’s good jazz played in the square. Waitress brought her pizza. She took a bite, called the waitress back & said “Gee hunny, I just love this English thing of bringing a sampler to try, It’s a great idea. I’ll have one of those.”
Agree, SE, pay with card, tip with cash.
“this tronc system which is chaired by a troncmaster and run by a committee of waiters and pizzaiolos”
Wow, that sounds like a huge waste of time.
If a tip is meant for good service, why should it be distributed at all?
If Kevin did a great job bringing my pizza, why should any proportion of my £5 tip go to Pamela, who spilled the arrabiata sauce all over the lady at the next table?
@JuliaM right, and AFAIK any decent till these days tracks every payment by server, plastic or cash. What’s the committee for?
Sounds like a cack-handed scheme for ‘fairness’ eg if the manager to spread the profitable shifts/tables around.
Those of us who work in professions where a tip would see both the tipper and tipee going to prison should be exempted from having to pay tips.
I pay the bill by credit card and tip with cash.
JuliaM,
Exactly. It’s always struck me that tipping is rather effective because the good people get the extra money and the crap people don’t. You quickly weed out the crap people because they can’t earn enough waiting.
When I was a student waiting tables, sharing tips balanced out the luck and the management favouritism.
Self policing too – Pamela would get a rocket up her arse back in the kitchen if she slacked off or screwed up too often.
There’s no reason why the tronc has to be run or overseen by the employer. The staff could decide to do this for themselves independent of Pizza Express. If what the employer is saying is true that the system is run by employees for employees then the 8% must represent the time the employer gives to staff to run the system.
VAT?
On tips?
Are you mad Tim?
The NIC position is that if the tronc is run by the employer, class 1 NIC is due. If run by employees then no class 1.
But VAT?
No way.
If it’s a “service charge” then VAT is applicable. If tips, not. The dividing line between the two is variable: but management control in one of those tests.
Osborne’s new minimum wage is likely to lead to more restaurants including service and discouraging tips
“Tim Worstall
If it’s a “service charge” then VAT is applicable. If tips, not. The dividing line between the two is variable: but management control in one of those tests.”
Well. no. It’s nothing to do with management control, just a question of whether it is compulsory or not. If a charge added on to a meal is compulsory, it’s part of the charge for the meal and VAT is included. If it is voluntary ‘tip’ then VAT is not added. Even if management control the tronc.