Information Note on the Court’s case-law 45

August-September 2002

Nerva and Others v. the United Kingdom - 42295/98

Judgment 24.9.2002 [Section II]

Article 1 of Protocol No. 1

Article 1 para. 1 of Protocol No. 1

Peaceful enjoyment of possessions

Employer’s inclusion of waiters’ tips in minimum wage: no violation

Facts : The applicants were all waiters. Cash tips which they received were put in a kitty (“ tronc ”) an d distributed out at the end of each week. Initially, tips included in cheque or credit card payments were dealt with by payment of the equivalent in cash but subsequently they were included in the applicants’ weekly pay slip as “additional pay”. This syst em was eventually agreed to by staff. The cheque and credit card gratuities were subject to deductions by the employer in respect of income tax and national insurance contributions. The applicants, who at the relevant time were entitled to a statutory mini mum remuneration, sued their employer for breach of contract, challenging the employer’s right to count these tips as part of their minimum remuneration. The Court of Appeal held that tips included in cheque or credit card payments should count against the minimum remuneration requirement, notwithstanding the customers’ intention. Leave to appeal was refused.

Law : Article 1 of Protocol No. 1 – It was not disputed that legal title to tips paid by cheque or credit card passed to the employer in the first inst ance or that the applicants duly received their share in accordance with the agreed proportion. Consequently, there had been no interference with each applicant’s agreed right to an appropriate share of the tips. They each received what they would have got via the tronc system, less tax and national insurance contributions. Indeed, they received them more speedily since, unlike the employer, they did not have to wait for the cheque and credit card payments to be processed. Furthermore, payment was guarantee d even if cheque or credit card payments turned out to be fraudulent. The applicants had not disputed that their employer complied with the statutory obligation to pay them a minimum wage. The applicants could not maintain that they had a separate right to the tips and a separate right to minimum remuneration calculated without reference to those tips. That assertion was not borne out by the legislation at issue as interpreted by the domestic courts. The fact that the domestic courts ruled in a dispute betw een private litigants that the tips at issue represented “remuneration” could not of itself be said to engage the liability of the State under Article 1 of Protocol No. 1. The conclusion of the domestic courts that the employer, and not the customer, paid the tips at issue out of its own fundscould not be considered arbitrary or manifestly unreasonable. Moreover, the applicants could not claim that they had a legitimate expectation that the tips at issue would not count towards remuneration. Such a view ass umed that the customer intended that this would not be the case, which was too imprecise a basis on which to found a legitimate expectation which could give rise to “possessions”.

Conclusion : no violation (6 votes to 1).

Article 14 in conjunction with Arti cle 1 of Protocol No. 1 – The applicants had not established that either the applicable legislation or its interpretation by the domestic courts discriminated against them vis-à-vis employees in other sectors of employment covered by that legislation. Inde ed, the applicants, being in a sector covered by the minimum wages legislation, were treated more favourably than employees in sectors outside the scope of that legislation.

Conclusion : no violation (unanimously).

© Council of Europe/European Court of Human Rights This summary by the Registry does not bind the Court.

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