By David Hanson MP / Latest News / 0 Comments

Making Sure Workers are Paid Fairly

Delyn MP David Hanson has welcomed moves to end tips counting towards payment of the National Minimum Wage and new powers to take action against rogue employers who underpay staff.

A consultation starts this week to listen to views on exactly how this will work on the ground.

As part of a crackdown on those who try to exploit workers, tough new penalties for employers who underpay their staff have been made law and will come into force in April. There could be unlimited fines for the most serious cases rather than the current maximum limit of £5,000.

David Hanson said

“I welcome these moves which will help protect vulnerable workers by insuring that the tips they receive are not used by their employers are part of the National Minimum Wage.

“When you go to a restaurant or to have a hair cut and leave a tip, you expect it to go to the staff on top of their pay, not to be put through the payroll to make up the Minimum Wage.

“Rogue employers need to be exposed. If you think a rogue employer is not paying up then get in touch with me on 01352 763159 or call the national minimum wage helpline on 0845 6000 678. This can be done anonymously. “

Notes to Editors

1.  To find out more about this consultation

2.  Currently, where tips and gratuities are given directly to workers by customers and are retained by the workers without any other party being involved, they cannot count towards NMW payment. Where there is evidence that cover charges, service charges, tips and/or gratuities are paid by the employer to the worker via the payroll then the tip can count towards national minimum wage pay.  The Givernment proposes to change the regulations so that in future tips, whether paid in cash or credit card, may not count towards the NMW.

3.  The UK minimum wage legislation received Royal Assent on 31 July, 1998 and came into effect in 1999. It is one of the highest in the OCED in terms of purchasing power. NMW for adult workers will is £5.73, the rate for 18-21 year olds is £4.77 and the rate for 16 and 17 year olds is £3.53.

4.  The Employment Act has now gained Royal Assent. Its measures, which are due to come into force in April 2009, include:

  • Removal of the limit on maximum fines for underpayment of the national minimum wage, currently £5,000.
  • The most serious cases of non-compliance will be tried at Crown Court, which can impose an effectively unlimited penalty
  • Introducing a fairer way of dealing with national minimum wage arrears, calculated so workers do not lose out.

4.  The minimum wage (adult rate) provides, with Working Tax Credits and other benefits, a guaranteed income of at least £292 per week for families with one child and one full time worker, which is equivalent to over £7.38 per hour.

5.  In the last year alone the Government helped to restore £3.9 million in arrears to over 19,000 workers and has also increased the enforcement budget for the NMW by £2.9 million.