Providing either condition 1 or 2 of the gratuity disregard is
satisfied (
NIM02905) payments of, or
in respect of, a gratuity or offering
are disregarded from earnings. The words
in respect of wide and general. They
mean no more than the existence of some link between the payment in
question and a gratuity. So, where a customer pays a gratuity to an
employer and the employer passes some or all of the gratuity to an
employee either directly or indirectly, the payment made to the
employee is in respect of a gratuity or offering.
Where customers pay gratuities, tips or voluntary service
charges to the employer, and the employer then passes on all or
some of the payments to a tronc (see
NIM02941 for information about troncs)
for distribution to employees, the payments from the tronc to the
employee are not gratuities but are payments in respect of
gratuities.
Facts
Customer adds £20 gratuity to his credit card transaction. The £20 is the employer’s property, see NIM02931.
The employer pays £15 direct to the employee but retains £5 to cover his credit card fees and administration costs.
Commentary
Although the £15 paid by the employer is not a gratuity, it is paid from the employer’s funds, its original source was the gratuity paid by the customer. So, the £15 is a payment in respect of a gratuity.
