Tips to be taken out of minimum wage

Thursday 31st July 2008

Minimum wage payments will no longer include tips under new government plans.

Currently those working on minimum wage in restaurants can find tips are being used to top up their income to the £5.52 per hour National Minimum Wage level, which rises to £5.73 on October 1st.

Only tips given directly to workers by customers cannot count to minimum wage payments, as opposed to credit card transactions which can be included as wages.

Business secretary John Hutton said: “Hundreds of thousands of people in the UK have jobs in sectors where tipping is commonplace.

"When people leave a tip, in a restaurant or elsewhere, they expect it to go to service staff and as consumers, we’ve got a right to know if that actually happens."

He added: “This is an issue of fairness and common sense and it’s one many people clearly care a lot about."

Mr Hutton concluded: “We also want to encourage employers to make it clear how tips are distributed so that customers know where their money is going and whether or not the establishment operates a fair tipping policy.”

However, Bob Cotton, chief executive of the British Hospitality Association, explained any change was not simple – as service charge payments made by credit card to push up wages to the minimum are not liable for national insurance payments.

"No-one has come up with up these changes are going to be done.

"Every proposal I have seen so far would leave the lowest earners worse off. The only person to benefit from the change is the taxman."

He added restaurants would need two years' notice of changes, as wage structures would have to change – maintaining differentials between waiters and better paid staff such as chefs – an so prices on the menu would rise.

Changes following consultation are expected in 2009.

Related News

<< Back To News Listings

News Article Search