Tips, gratuities and service charges: commentary: Nerva v R. L. & G Ltd  ICR 11 (CA)
Commentary on Nerva
In Nerva v R. L. & G Ltd  ICR 11 (CA), the Court of Appeal dismissed an appeal by 4 waiters against a decision of the High Court that tips paid by credit card or cheque were to be treated as remuneration for the purposes of their employer’s obligation to pay a minimum wage under the Wages Act 1986.
The appellants were employed as waiters. Their employer would include, in their weekly pay slips, an amount equivalent to the tips paid by customers by way of credit card or cheque. Under the Wages Act 1986 employers were obliged to pay certain classes of workers, including waiters, a minimum wage. The employer in this case claimed that this obligation was met as the statutory remuneration included the credit card/cheque tips paid to the waiters. The appellants claimed that the employer could not count these tips towards the statutory minimum as the tips belonged to them. The Court of Appeal held that an employer was entitled to count credit card or cheque tips as remuneration for the purposes of meeting its minimum wage obligations under the Wages Act 1986. The reasoning being that when cheque or credit card payments are made by a customer all amounts paid become the property of the employer. So, where employers paid out tips to employees they were doing so with their own money as opposed to money belonging to the employee.