Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Employment lawEmployment tribunalsPay & benefitsMinimum wage

HMRC vs Anabel’s, Court of Appeal

by Personnel Today 3 Jun 2009
by Personnel Today 3 Jun 2009

Key points



  • The Court of Appeal has accepted the view taken by HMRC that any tips received by an employer, which were transferred to a troncmaster’s bank account before being distributed by the troncmaster to employees were not paid by the employer to the employees for the purposes of the NMW Regulations, and so do not count as earnings towards the NMW.

What you should do

The Court of Appeal’s decision in this long running case will have significant legal and tax implications for all businesses operating physical tronc systems, even if these are not used to meet the NMW. Those businesses operating a virtual tronc where payments are made alongside wages via a single payroll will not be affected.

Employers may need to change administrative arrangements to ensure that they do not use any payments made by troncmasters to top up the pay of their employees to the NMW. If they continue to do so, they will be in breach of their obligations under the NMW Regulations and may face enforcement notices requiring them to pay the NMW and any arrears.

The government has announced that from 1 October 2009, employers will be prohibited from using tips, intended by most customers to go direct to staff, to satisfy their obligations to pay NMW. Instead they will have to pay their employees the NMW and tips paid by customers should be paid on top of this.

Details

Annabel’s (Berkeley Square) Ltd, George (Mount Street) Ltd and Harrys Bar Ltd (together referred to as Annabel’s) operated an arrangement (known as a tronc) to distribute service charges, tips and gratuities (tips) to their waiters and bar staff. Their senior managers (known as the troncmasters) operated these troncs. Discretionary tips were paid into Annabel’s bank account, most often by credit cards and cheques, and an amount equivalent to this was transferred to the troncmasters’ bank accounts.

Basic wages

The troncmasters accounted for any income tax before issuing pay slips or cash to workers for these troncs on a regular basis. Annabel’s continued to pay its employees’ basic wages, albeit less than the national minimum wage (NMW), on a regular basis and issued separate payslips to the employees.

HM Revenue & Customs Commissioners (HMRC) served enforcement notices on Annabel’s in March 2006, requiring it to pay its employees NMW arrears. A tribunal upheld Annabel’s appeal and withdrew the enforcement notices. The tribunal held that sums distributed by the troncmasters from the troncs were “money payments paid by the employer to the worker” under the National Minimum Wage Regulations 1999 (NMW Regulations).

The EAT upheld HMRC’s appeal and reinstated the enforcement notices. It held that the tribunal had erred in finding that money paid from the troncs had been “paid by the employer” so as to count for the purposes of calculating the NMW.

Property of Annabel’s

Sign up to our weekly round-up of HR news and guidance

Receive the Personnel Today Direct e-newsletter every Wednesday

OptOut
This field is for validation purposes and should be left unchanged.

Annabel’s appealed to the Court of Appeal, which dismissed the appeal. It found that on receiving payments from customers by credit card or cheque, the tips had become the property of Annabel’s. However, it held that as soon as Annabel’s transferred the monies to the troncmasters’ bank accounts, the money could be said to be held on trust for the employees and Annabel’s no longer retained any legal or beneficial interest in the money.

In effect, the troncmasters acted independently of Annabel’s and did not allocate money from the troncs “on behalf of the employer”.

Personnel Today

previous post
Anonymous applications MP sticks to her guns
next post
Top job – Scott Jarvis, resourcing and change director, HR, Sodexo UK and Ireland

You may also like

Workers with second jobs at an all-time high

11 Jul 2025

Ministers loosen fire and rehire proposals in Employment...

10 Jul 2025

£188k tribunal award for director sacked after cardiac...

10 Jul 2025

Firms’ salary secrecy means ‘they lose out on...

10 Jul 2025

Court of Appeal rules that Ryanair agency pilot...

9 Jul 2025

ADHD and autism diagnosis was evidence of impact,...

9 Jul 2025

Bereavement leave to extend to miscarriages before 24...

7 Jul 2025

Company director wins £15k after being told to...

4 Jul 2025

NHS 10-year Health Plan sets out vision for...

3 Jul 2025

How can HR prepare for changes to the...

3 Jul 2025

  • Empower and engage for the future: A revolution in talent development (webinar) WEBINAR | As organisations strive...Read more
  • Empowering working parents and productivity during the summer holidays SPONSORED | Businesses play a...Read more
  • AI is here. Your workforce should be ready. SPONSORED | From content creation...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2025

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2025 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+