Mr M A Bento v BAGS E2 Ltd (in voluntary liquidation): 6017149/2024
EMPLOYMENT TRIBUNALS
Case No 6017149/2024
Between
Mr M A BentoClaimantBAGS E2 Ltd (in voluntary liquidation)Respondent
Before
Employment Judge CarpenterIn person for claimantNot represented for respondentDate 21 March 2025
REASONS
[1]The Claimant was employed by the Respondent as a front of house assistant from 12 July 2024 to 11 August 2024 when he left following a disagreement with the area manager.[2]The Claimant presented an ET1 in time on 2 November 2024 claiming that he was owed holiday pay, unpaid wages (tronc payments) and notice pay. The Claimant indicated that he had been constructively dismissed by the Respondent, but did not make a claim for unfair dismissal.[3]The Respondent presented an ET3 on 10 December 2024. The Respondent accepted that the Claimant was owed two days’ holiday pay but denied that he was owed any tronc payments or notice pay.[4]The hearing was held on 21 March 2025 by CVP. The Respondent did not attend.[5]The Respondent entered into Creditors Voluntary Liquidation on 17 February 2025, and the joint liquidators wrote to the Tribunal on 11 March 2025 to indicate that they would not be attending the hearing.[6]The Claimant assisted the Tribunal with a bundle of 50 pages comprising:a. screen shots of WhatsApp conversations (text and audio) largely in Brazilian Portuguese with certified translations into English;b. Grievance letters submitted to the Respondent by the Claimant;c. Offer of employment;d. Employment contract;e. Bank statements;f. Pay slips.[7]The Claimant claimed the following amounts:a. Holiday pay £224b. Tronc payments £535.50c. Notice pay £640
Findings of fact
[8]The Tribunal, having carefully reviewed all the evidence (both oral and documentary) before it, finds the following facts proved on the balance of probabilities:[9]The Respondent is a restaurant trading as Boom Bap Burger. The Claimant was employed as a front of house assistant from 12 July 2024 until 11 August 2024. During this period the Claimant worked 119 hours.[10]As indicated by the offer of employment and employment contract, the hourly rate of pay was £11.50 plus tronc payments arising from the service charge paid by customers. The offer of employment stated: “Hourly rate: £15 per hour made up of £11.50 salary and £3.50 tronc. Wages are paid weekly in arrears and tronc is paid monthly. Cash tips are on top of this. Tronc: We charge 10% service for all customers benefitting from table service. The tronc is shared amongst all the staff and is weighted depending on hours and seniority but does fluctuate. No tronc will be payable in your first week and tronc payments are at the total discretion of the tronc master. The 12 month tronc average for a full timer is £3.50 to £4 per hour and over £4.50 in the busier months. Cash tips are on top of this.”[11]It was not clear from the evidence who the ‘tronc master’ was; the Claimant indicated that at times it had been suggested that it was Rodrigo Brick, the general manager, and at other times it was suggested that it was Maila, the area manager.[12]I find that there was an established expectation that tronc payments of £3.50 to £4.50 an hour would be paid as part of normal salary. There was no indication that tronc payments were dependent on the employees’ conduct or level of performance, or subject to any criteria other than seniority and hours worked. While the tronc payments were stated to be at the tronc master’s discretion, there was no indication that they would be withheld on termination of employment.[13]The level of tronc payments varied according to the custom received by the Respondent. The Claimant gave evidence that during the busy summer period the tronc payments would be at least £4.50 an hour, and potentially higher. I find that the expected level of tronc payments during this period was £4.50 per hour.[14]The contract of employment indicated that the employer could terminate the employment giving the statutory notice period. The contract also indicated that accrued but untaken holiday would be paid in lieu on leaving employment.[15]On 5 August the Claimant had a conversation with the general manager, in which the Claimant indicated that he was not happy with his wages. It was agreed between them that the Claimant would leave his employment on 18 August 2024.[16]On 10 August the Claimant had a disagreement with the area manager. The Claimant had expressed dissatisfaction with the pay arrangements; the area manager suggested that if the Claimant was unhappy with the pay structure he could leave immediately and not return. She also indicated that she had discretion to withhold his tronc payments.[17]On 11 August the Claimant discovered that his scheduled hours had been significantly reduced from his agreed full-time hours of 40 hours per week to 20 hours only. The Claimant interpreted that reduction in hours as being retaliatory due to his disagreements with the area manager and not due to business needs.[18]Later on 11 August the Claimant had another disagreement with the area manager. She told him that he could “go out the same door you came in” and indicated that he should leave at 5pm and not return (he was scheduled to work to 11.30pm). The Claimant said that if the area manager was terminating his employment prematurely, she would need to cover his notice period until 18 August; she said this was fine by her. The Claimant then left the premises.[19]Following this incident the Claimant sent an audio WhatsApp message to the general manager indicating what had happened and noting that “I don’t know if I was fired or if I resigned”; he asked the general manager whether he needed to send a resignation letter.[20]The general manager replied on the same day (also by audio WhatsApp message), indicating that the Claimant did not need to send a resignation letter and indicating that the Claimant would be paid properly, including his tronc[21]I find that the Claimant was dismissed without notice by the area manager on 11 August.[22]The Claimant was subsequently paid for the hours he had worked, but was not paid tronc payments, holiday pay or notice pay. The relevant law Deduction from wages (tronc payments)
The relevant law
[23]The right not to suffer unlawful deduction from wages is included in section 13 Employment Rights Act 1996 (“the 1996 Act”), which states: (1) An employer shall not make a deduction from wages of a worker employed by him unless— (a) the deduction is required or authorised to be made by virtue of a statutory provision or a relevant provision of the worker's contract, or (b) the worker has previously signified in writing his agreement or consent to the making of the deduction. [...] (3) Where the total amount of wages paid on any occasion by an employer to a worker employed by him is less than the total amount of the wages properly payable by him to the worker on that occasion (after deductions), the amount of the deficiency shall be treated for the purposes of this Part as a deduction made by the employer from the worker's wages on that occasion.[24]“Wages” is defined by section 27 of the 1996 Act: (1) In this Part “wages”, in relation to a worker, means any sums payable to the worker in connection with his employment, including— (a) any fee, bonus, commission, holiday pay or other emolument referable to his employment, whether payable under his contract or otherwise, [...][25]The words “properly payable” in section 13(3) of the 1996 Act mean there must be some legal entitlement to the sum in question (New Century Cleaning Co Ltd v Church [2000] IRLR 27).[26]It is worth noting that the claim arose before the coming into force of the Employment (Allocation of Tips) Act 2023 on 1 October 2024 (“the 2023 Act”). The 2023 Act has amended the definition of wages in section 27 and added a new Part 2B to the 1996 Act which regulates the allocation of tips and service charges. The law referred to in this decision is as it had effect in August 2024, and therefore these amendments are not taken into account.[27]Prior to the coming into force of the 2023 Act, the question whether tips and service charges constituted wages was somewhat less clear than it is today. However, in the case of Saavedra v Aceground ltd (t/a Terrazza Est) [1995] IRLR 198, EAT (“Saavedra”) the Employment Appeal Tribunal found that tronc payments were wages (under the equivalent provisions in the Wages Act 1986) where an individual had a contractual right to pay of “£7.80 per session plus service”, and that there had been an unauthorised deduction of wages in circumstances where a proportion of the tronc had been paid to the management rather than to the staff providing service.[28]The Employment Appeal Tribunal found that the stated discretion as to distribution of the tronc was limited as to allocating to those providing service: “1. We accept that the allocation of the tronc is a matter for the discretion of the respondent's management so that the latter can give effect to a contract of employment that stipulates payment of 'service'. The latter can only be funded from a tronc accumulated and disbursed by management. 2. We find, however, that this exercise of discretion is limited to allocating to those who give service that which is paid for service. What is 'properly payable' to the former, whether under contract or otherwise (it matters not which for present purposes), is the latter. 3. We therefore find that the allocation of a proportion of the tronc to the management was outwith the bounds within which the respondents could lawfully exercise discretion [...].” Notice pay[29]An employee, by virtue of their contract of employment, is entitled to be given a period of notice before the contract is terminated, being either the notice period prescribed by their contract, or the statutory minimum notice (whichever is longer). Where an employer dismisses an employee without notice or payment in lieu of notice, the employee has been wrongfully dismissed and is entitled to seek damages equal to the pay and value of benefits they would have received.[30]The applicable statutory notice period is one week, as per section 86(1) of the 1996 Act. Holiday pay[31]The right to holiday pay is contained in the Working Time Regulations 1998, regulations 13 and 13A. Regulation 13 provides for a ‘standard’ entitlement of four weeks per year, and regulation 13A provides for an ‘additional’ 1.6 weeks’ leave. Regulation 15B makes provision for irregular hours workers and partyear workers. The rate of holiday pay is set out in regulation 16: (1) A worker is entitled to be paid in respect of any period of annual leave to which he is entitled under [regulations 13, regulation 13A and 15B]1, at the rate of a week's pay in respect of each week of leave. [...] (3ZA) In the case of entitlement under regulations 13 and 15B the following types of payments are to be included when determining the amount of a week's pay for the purposes of this regulation— (a) payments, including commission payments, which are intrinsically linked to the performance of tasks which a worker is obliged to carry out under the terms of their contract; (b) payments for professional or personal status relating to length of service, seniority or professional qualifications; (c) other payments, such as overtime payments, which have been regularly paid to a worker in the 52 weeks preceding the calculation date.[32]In considering whether tronc payments should be included in the calculation for holiday pay under regulation 13, it is therefore necessary to consider whether they are payments “which are intrinsically linked to the performance of tasks which a worker is obliged to carry out”. Conclusions Deductions from wages (tronc payments)
Conclusions
[33]It is clear from the terms of the employment contract and employment offer that tronc payments were understood as an integral part of the remuneration payable under the contract. There was therefore a legal entitlement to the tronc[34]Whilst tronc payments were stated to be at the discretion of the tronc master, this discretion did not extend so far as to discretion to withhold payments entirely for periods worked by an employee in circumstances where there was a disagreement with management, or where the employee left their employment.[35]As per Saavedra, the tronc master’s discretion was not absolute, but was constrained by the principle that the purpose of the tronc is for distribution amongst staff who have provided the service for which customers’ service charges are payable. Given that the Claimant had provided such service during the hours that he worked for the Respondent, it was anticipated under the terms of the contract that he should receive tronc payments for such service. There was nothing in the wording of the employment contract or offer letter which suggested that tronc payments were subject to any criteria other than seniority and hours worked.[36]The proposition that tronc payments were an integral part of the wages payable to the Claimant is also supported by the fact that the general manager assured the Claimant on 11 August that he would be paid his wages including tronc payments, albeit that this assurance was not subsequently honoured.[37]I therefore find that by failing to pay tronc payments, the Respondent made an unauthorised deduction from the Claimant's wages in the period 12 July 2024 to 11 August 2024.[38]In calculating the amount due, I have used the figure of £4.50/hour since as noted above, I find that this was the applicable rate during the busy summer period. Unpaid tronc payments 119 hours x £4.50 (tronc payments at summer rate) = £535.50[39]The Respondent shall pay the Claimant £535.50, which is the gross sum deducted. The Claimant is responsible for the payment of any tax or National Insurance. Notice pay[40]As I have found that the Claimant was dismissed without notice by the area manager on 11 August 2024, he is entitled to one week’s pay in lieu of notice. Since, as noted above, the Claimant’s contractual wages included tronc payments notice pay is calculated including the figure of £4.50/hour for tronc Hourly rate £11.50 (base) + £4.50 (tronc payments at summer rate) = £16/hour Notice pay £16 x 40 hours = £640[41]The Respondent shall pay the Claimant £640 as damages for breach of contract. This figure has been calculated using gross pay to reflect the likelihood that the Claimant will have to pay tax on it as Post Employment Notice Pay. Holiday pay[42]The Respondent conceded that the Claimant was owed two days’ holiday pay. The Respondent made an unauthorised deduction from the Claimant's wages by failing to pay the Claimant for holidays accrued but not taken on the date the Claimant’s employment ended.[43]The Claimant had a contractual right to tronc payments, and such payments were intrinsically linked to the performance of his work. Therefore, the calculation of holiday pay under regulation 16 of the Working Time Regulations properly includes the tronc payments. As above, the figure of £4.50/hour reflects that the tronc payments were typically higher during the busy summer period. Holiday pay 14 hours x £16/hour = £224[44]The Respondent shall pay the Claimant £224. The Claimant is responsible for paying any tax or National Insurance. Total amount payable[45]The total amount the Respondent shall pay to the Claimant is £1399.50.
Conclusions
[1]The complaint of unauthorised deductions from wages is well-founded. The respondent made an unauthorised deduction from the claimant's wages in the period 12 July 2024 to 11 August 2024.[2]The respondent shall pay the claimant £535.50, which is the gross sum deducted. The claimant is responsible for the payment of any tax or National Insurance. Notice Pay[3]The complaint of breach of contract in relation to notice pay is well-founded.[4]The respondent shall pay the claimant £640 as damages for breach of contract. This figure has been calculated using gross pay to reflect the likelihood that the claimant will have to pay tax on it as Post Employment Notice Pay. Case Number: 6017149/2024 Holiday Pay[5]The complaint in respect of holiday pay is well-founded. The respondent made an unauthorised deduction from the claimant's wages by failing to pay the claimant for holidays accrued but not taken on the date the claimant’s employment ended.[6]The respondent shall pay the claimant £224. The claimant is responsible for paying any tax or National Insurance. Total amount payable[7]The total amount the respondent shall pay to the claimant is £1399.50. Approved by: Employment Judge M Carpenter Date: 21 March 2025 Note Reasons for the judgment were given orally at the hearing. Written reasons will not be provided unless a party asked for them at the hearing or a party makes a written request within 14 days of the sending of this written record of the decision.