Tips and tronc payments should be included in expanded Job Support Scheme, says leading hospitality accountant

09/10/2020

Following the Chancellor’s announcement this afternoon that the Job Support Scheme (JSS) will be expanded to businesses required to close due to Coronavirus restrictions, a leading hospitality accountant has said that tips and troncs must be included in the scheme.

The scheme will cover 67 per cent of the usual wages of employees of businesses required to close for at least seven days, while employers will be required to cover Employer National Insurance Contributions (NICs) and pension contributions.

Peter Davies, Client Service Partner at WMT Chartered Accountants and Managing Director of WMT Troncmaster Services Ltd, said: “Today’s announcement is a welcome development, which appears to be targeted largely at hospitality businesses at risk of closure where restrictions are strengthened further.

“As long as employers feel able to meet the up-front costs of the scheme until they can receive reimbursement from the Government, I would hope this will help avert a large proportion of the redundancies we would otherwise have seen.

“However, because many people in the sector will be part-time employees on or near to the National Minimum Wage or National Living Wage, payments worth just 67 per cent of their wages could leave them struggling to make ends meet. This will represent a significant fall in income compared with the 80 per cent currently paid to furloughed workers.

“There is a real risk that such a drop in income could lead hospitality workers to leave the sector for opportunities in sectors that are not required to close.

“For these reasons, tips, troncs and all other payments made to employees through payroll and which employees have paid tax on should be included in the calculation of usual wages for this scheme.

“These payments have already been declared to HM Revenue & Customs through Real Time Information submissions and so there is no risk of fraudulent claims arising as a result of such a change.

“I hope that when full details of the scheme are published these payments will be included in the calculations.”

Earlier this year Peter Davies wrote a letter, which was signed by more than high-profile 50 London restauranteurs, calling on the Chancellor to include tronc earnings in the calculations of furlough payments under the Coronavirus Job Retention Scheme (CJRS), to which a response is still awaited.