Why a restaurant chain’s employee deductions mask wider confusion

If you popped into the wrong branch of Pizza Express this month, you might have been greeted by more than dough balls and garlic dip. The Italian chain drew angry protests from unions in a number of locations amid a row over deductions from employees’ tips.

Like many restaurants, Pizza Express distributes gratuities using a ‘tronc’ system, which pools tips and processes them through the PAYE system. Because tronc distributions are technically paid and allocated by an appointed employee, known as a ‘troncmaster’, these amounts do not attract national insurance.

But when it was revealed that the chain was deducting eight per cent from tips paid by card, campaigners were aghast. Pizza Express says the amount represents the scheme’s running costs (by contrast, cash tips go directly to staff, the company says, and employees are responsible for reporting these to HMRC).

Employers do not legally have to pass on tips paid to them directly, such as a discretionary service charge settled by card. The government issued a code in 2009, which advises businesses to give workers a written statement on tipping policies, including details of how tips are distributed, whether cash and card tips are treated differently, and what deductions are made. It is voluntary, however, and is silent on what would be considered an acceptable deduction.

Nor is Pizza Express alone in making deductions. Stablemates Zizzi and ASK both subtract eight per cent, while members of Tragus Group, including Cafe Rouge and Bella Italia, deduct 10 per cent. Others, such as Carluccio’s, pass 100 per cent of tips to staff, and the Italian chain says it doesn’t pool them.

Tips cannot form part of the minimum wage, following legislation introduced in 2009, but the issue is far from clear-cut. Pizza Express says: “All tips, very rightly, go to the people who deserve them – our team members.” The Unite union says the firm makes £1 million a year from tips, a claim it denies. For HR professionals untangling the issue, that eight per cent could come with a hefty price.