Who do cash tips belong to?

Lungboy

Apologies if this is the wrong forum for this, I really am not sure where it belongs. It's also really hard to search the forums for any subject involving the word "tips" for obvious reasons.

A friend works in a bar/club, and the company policy is that all tips go to the company. They aren't subsequently shared out, the company simply keeps them as extra profit. They threaten to sack anyone caught keeping tips. I've searched high and low on various HMRC and Gov.uk sites to try and find out if they are allowed to do this. I know that if the tip is paid via card, then yes they can, and there are all sorts of rules regarding troncs and so forth, but I can't find a definitive rule/law covering cash tips given directly to a worker. Can anyone help?

WestonDave

As its arguably payment for services provided by the company - albeit by one individual, then I don't think the policy is unreasonable or unlawful.


However it should also be made clear to customers that tips are not benefiting staff directly. (Obviously if they make the business more viable so staff keep their jobs etc then there is an indirect benefit). If customers think they are benefiting the person that served them but in fact its just going into general profits then that might be a trading standards issue if they are being "duped".

getmore4less

Just start telling the customer that they don't get the tips so don't bother tipping.

spread the word through friends and they can feed the social media

Acc72

Out of interest, which company is this ?

InsideInsurance

Law allows the company to keep tips.

There was a change in law around 2008 which stopped companies using tips as payment towards the National Minimum Wage - ie paying someone £4.50/hr salary because they get an average of £2.20/hr in tips and so the two combined take them over NMW. Unfortunately the law didnt mean that tips have to go to staff though.

Technically the company is keeping the tips as extra revenue, if there is a profit or not is a separate matter.

pmlindyloo

I find this thread interesting as everything I have read indicates that cash tips are gifts to the employee.

I understand that contracts can contain clauses that do not allow employees to receive gifts where there might be an element of possible conflict of interest (eg carers accepting gifts in care homes) but find it difficult to understand how an employer can insert such a clause in a contract in the circumstances outlined here.

However, with the threat of dismissal and the cost of employment tribunals now being so large I cannot see anyone challenging this.

My best suggestion is for your friend and colleagues to join a union and ask them to negotiate a deal that includes the employees being entitled to keep their own cash gifts or at least, pool them.

Other than that I would seriously consider ensuring that (somehow) customers knew that tips were lining the employer's pockets and nobody else's.

InsideInsurance

pmlindyloo wrote: »

I find this thread interesting as everything I have read indicates that cash tips are gifts to the employee.

They are considered earnings not gifts.

The "issue" is over who does it belong to? The person that happens to have come across to take the payment even though they may not have had any prior contact with you? How about the bar staff in the restaurant who've given you good service but never are the ones that take the payment? Kitchen staff?

It was interesting to read some notes on what the different approaches the large chain restaurants take between those that get it keep it -v- sharing it out across all the staff either equally or by a set proportion between front of house and back of house etc. One chain allegedly poll the staff each year at each site and decide on the mechanism of distribution - it didnt say which was the most common result

Poppie68

I have removed this post because of inaccuracies while trying to put thoughts to keyboard.....

pmlindyloo

InsideInsurance wrote: »

They are considered earnings not gifts.

The "issue" is over who does it belong to? The person that happens to have come across to take the payment even though they may not have had any prior contact with you? How about the bar staff in the restaurant who've given you good service but never are the ones that take the payment? Kitchen staff?

It was interesting to read some notes on what the different approaches the large chain restaurants take between those that get it keep it -v- sharing it out across all the staff either equally or by a set proportion between front of house and back of house etc. One chain allegedly poll the staff each year at each site and decide on the mechanism of distribution - it didnt say which was the most common result

CAB disagrees with you.

http://www.adviceguide.org.uk/england/work_e/work_rights_at_work_e/rights_to_pay.htm

They say cash given voluntarily are gifts not earnings.

InsideInsurance

pmlindyloo wrote: »

CAB disagrees with you.

http://www.adviceguide.org.uk/england/work_e/work_rights_at_work_e/rights_to_pay.htm

They say cash given voluntarily are gifts not earnings.

The government disagrees https://www.gov.uk/tips-at-work/tips-and-tax

Tax is payable on tips and so its income and not a gift

CAB often means well but arent always overly careful with their wording. It cannot be considered part of your salary, as for calculating NMW etc as per the prior post and the law change in 2008 but that doesnt mean its a gift either

pmlindyloo

InsideInsurance wrote: »

The government disagrees https://www.gov.uk/tips-at-work/tips-and-tax

Tax is payable on tips and so its income and not a gift

CAB often means well but arent always overly careful with their wording. It cannot be considered part of your salary, as for calculating NMW etc as per the prior post and the law change in 2008 but that doesnt mean its a gift either

Semantics really.

This link uses the words 'gift' but agree that it is counted as income for tax purposes.

Not sure if this helps with the original question - should the employer be taking the gifts? After all if it is the employees income which he/she pays tax on then surely it isn't anything to do with the employer?

As I said, interesting.

Anyone know of any case law where this was addressed?