Under the Income Tax Law, if an employer is involved in the collection and distribution of tips for employees then he is obliged to include those in the ETI returns and to deduct tax accordingly. If there is an arrangement amongst the staff themselves, and the employer is not involved, then there is no such obligation. There is still an obligation, of course, on the employees themselves to declare the tips but it would be naive to imagine that they will all do so to the full extent and, in any event, workers who are only here for the season will be gone before we would have the chance to assess the tips We are in the process of considering whether we should include tips in the Coding Notices of employees in the hostelry, and similar, industries, as a matter of course, in order to counter the avoidance/evasion of tax on tips, as far as possible. This is something for the future, however. On the basis that an employer could only, reasonably, be required to operate the minimum wage on the basis of what he knows about then, clearly, he could not take account of tips which are earned by his employees and the collection and distribution of which is something not under the control of the employer himself. If so, for those employers who do collect/distribute tips to their employees, there is, indeed, an element of disparity if those tips are included in the calculation of what constitutes the minimum wage.

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