D paid staff less than national minimum wage and topped up basic wages to MW through a troncmaster system (all tips were paced in a tronc and these were then distributed by a troncmaster). CA found against D. Reg. 30 of NMW Regulations 1999 is only concerned with money paid by the employer to the worker. It said that as soon as the employers transferred the tips to the troncmasters' bank accounts, the money was held on trust for the employees and the employers no longer retained any legal or beneficial interest in it. The troncmasters acted independently and the money was not "paid by the employer", so could not count towards national minimum wage liability.
NB Dept BERR claims that as of 1st October 2009 service charges, cover charges, tips and gratuities can no longer be used to make up NMW pay. See reg. 31(1)(e) NMW Regulations 1999. Annabel’s case is still useful, as it highlights that only money paid by the employer to the waiter can go towards calculating minimum wage, and not that paid by a troncmaster.