Government to close tips loophole
The Government has announced a fundamental shake-up of the law on tipping.
Tips will no longer be able to count towards minimum wage payments — and employers are "encouraged" to make it clear to customers where their tips go.
These policies have been announced in measures to mark the 10th anniversary of the National Minimum Wage (NMW). A 12-week consultation on the plans is to be launched in the autumn and, if agreed, the changes will come in on 1 October 2009.
In a comment piece for this morning's national newspapers, seen by the MA, Business Secretary John Hutton said: "Dealing with this is a matter of fairness and common sense.
"When we go to a restaurant or to have our haircut and we leave a tip, we expect it to go to the staff member in addition to their pay — not to be processed through the payroll to make up the minimum wage."
Hutton added: "We want to encourage employers to make it clear how tips are distributed so customers know where their money is going and whether or not the establishment operates a fair tipping policy."
Premium Bars & Restaurants chief executive Mark Jones welcomed the move and said the practice of counting tips towards NMW calculations was "disgraceful".
The Barracuda Group said tips collected in its houses were distributed among team members or on an individual basis depending on the outlet.
"Under no circumstances do we use tips to top up wages," said a spokesperson.
Licensees Unite, a union for pub managers, also welcomed the move. Executive member Dave Daly said: "The issue of how tips are used has been a thorny one for the trade.
"Personally, I would like to see staff who receive a tip from a customer keep the cash. But in practice many pubs and restaurants pool tip money and distribute it evenly among all staff members, sometimes according to the hours worked.
"Many staff actually rely on tips as a supplement to their wages to ensure they take home a decent amount of money. The practice of paying people less than the minimum and using tips to make up the shortfall is wholly wrong."
The full adult NMW currently stands at £5.52 and increases to £5.73 from 1 October.
