Government urged to reconsider as HMRC suggests furlough pay will not include tronc

According to a government spokesperson, the 80% of average wages the government will cover for furloughed workers through the coronavirus job retention scheme (CJRS) will not include tips, tronc or service charge.

UKHospitality chief executive Kate Nicholls said the decision was “disappointing” and urged the government to reconsider.

She said: “It is incredibly disappointing that the government has seen fit to exclude tronc payments from people’s earnings. HMRC will have evidence that employees are paid tips through a tronc, so there seems no reason not to include it in the Job Retention Scheme.

“This is taxable income that team members have earned. Excluding it from the scheme means that furloughed employees will receive less money to see them through this crisis. Money they should be entitled to.

“Hospitality employees put in a huge amount of hard work to earn their tips, often going above and beyond to give customers a fantastic experience. At such a difficult time for the country, people’s hard work should be acknowledged, and those people should be supported. Not doing so only risks putting additional, unnecessary pressure on the welfare system.

“Hospitality businesses are doing their best to support employees during extraordinarily difficult times. But with zero revenue and persistent demands on cash from landlords and others, there is only so much they can do. Including tronc payments in the Job Retention Scheme would give more people some much-needed support, and we hope the government reconsiders.”

Government guidelines published last week suggested employers could claim for any regular payments they are obliged to pay employees, including wages, accrued overtime, fees and compulsory commission payments. However, discretionary bonuses (including tips), commission payments and non-cash payments were excluded. But questions were raised over service charge and tronc which go through the PAYE system.

A spokesperson for HMRC said that currently, tronc is not eligible to be part of the scheme, as a form of paying tips. Further guidance has not yet been published.

The furlough scheme was introduced by chancellor Rishi Sunak to cover 80% of the wages of workers whose jobs have all but disappeared during the lockdown put in place following the coronavirus outbreak.

Grants to cover wages will be backdated until 1 March and will be available for at least three months from this date. Sunak said there would be no limit to the amount of funding that will be available via the scheme as he unveiled what he called "unprecedented measures for unprecedented times".

The scheme is believed to have saved thousands of hospitality jobs, however employers are still awaiting details of the policy and a concrete timeline of when funds will be received.

Read more: Kate Nicholls: 'The government really does need to act now, otherwise the administrations will continue'