Payment for coronavirus-related work must include restaurant service charges and tips

A cross-party group of lawmakers said the government needs to change the Coronavirus Job Retention Program (CJRS) to allow hotel companies to include trunk payments (service charges) in their calculations for employees on leave. The exclusion of such income, which in most cases is part of a worker’s salary or monthly salary and is subject to tax, has been challenged since its announcement in April – on the grounds that catering employees on leave would receive well under 80%. of their regular income. One of London’s foremost restaurateurs described the government’s policy as an “extraordinarily discriminatory decision”.

Initially, government guidelines on whether employers were allowed to include the trunk in their requests for employees on leave were vague. The decision to explicitly exclude it was not announced until the end of April, after which some restaurants had already started drafting and submitting requests.

The move sparked concern among prominent members of the industry, before a letter to the Treasury, written in early May, by trunk expert Peter Davies, said HMRC had misunderstood how the system worked. The director general of the professional body representing restaurants in the United Kingdom had also testified before the select committee the previous month.

Davies’ campaign received the support of dozens of MPs from all political walks of life, who agreed that it was unfair and equally straightforward to remedy the situation. The number of deputies who support the inclusion of the trunk in the regime has increased to 49 following the publication of the treasury committee report this week.

Trunk works by pooling all tips, gratuities, and service charges, and then distributing them among staff as monthly payments, as opposed to each staff member earning individual tips. Since these payments are somewhat predictable, many employee contracts indicate an official wage or an hourly wage lower than the net monthly wage, due to the addition of these trunk payments; in some cases, employers contractually commit to a supplement to the staff.

In the Treasury committee’s findings, in a section titled “People Lacking Support”, he said he “identified the next area where actions should be taken by the Treasury to provide additional support to households”.

Payments made to employees through a PAYE trunk system — for example employees in the hospitality industry whose tips are collected electronically and included in their payslips — are not currently considered wages in the calculation of wages on leave. of an employee, although these payments potentially represent a proportion of that employee’s regular and reliable income, and being subject to income tax.

“The government should amend the CJRS to allow trunk payments made via PAYE to be included in the worker’s salary calculation when assessing entitlements,” the section concludes.

The government has not responded to Eater London’s request for comment on the findings and has yet to indicate whether it will change its guidance in light of the recommendation.

However, some members of the legal profession say the decision to reverse the decision to exclude trunk calculations from leave requests could have income ramifications for long-term hospitality workers.

Lydia Christie, an employment lawyer at Howard Kennedy, told Eater that whether hospitality workers will be delighted to have the support of the Treasury Committee on the issue of trunk payments, “it remains to be seen however whether the report will ultimately lead the government to retrospectively allow these payments to be claimed through the CJRS.

Christie said: “While the Treasury Committee report highlights the injustice of the CJRS for hospitality workers, it does not address the broader potential legal issues, beyond the life of the CJRS, whether trunk payments should be viewed as “wages” paid by employers to employees.

“As of October 2009, amounts paid by employers to workers that represent tips, gratuities, services or cover charges paid by customers are not factored into the national minimum wage. If the government now agreed that trunk payments could be considered “wages” for the purposes of the CJRS, it is not clear how this could impact the position of the national minimum wage.

“Updated guidance on tipping practices, including trunk management, which address tax, labor law and national minimum wage issues would be welcome and would hopefully provide much needed clarity. ”

UK Hospitality did not immediately respond to Eater’s request for comment on whether he expected the government to act on the report’s recommendation.

Comments are closed.