Delyn MP David Hanson is has welcomed the news that the Government plans to amend regulations so that tips can no longer count towards payment of the National Minimum Wage.
The changes will end the practice of employers using gratuities and service charges processed through the payroll to ‘top up’ staff wages to meet the £5.52 per hour National Minimum Wage, which rises to £5.73 on 1 October.
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.
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.
A consultation on implementing the Government’s recommendations will be launched in the autumn.
Guidance for both workers and employers will be issued following the consultation to ensure a smooth transition when the regulations are changed, which is anticipated to be 2009.
David Hanson said:
“These proposals are certainly very welcome and a good way to celebrate the 10thanniversary of the National Minimum Wage.
“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.
“Under these proposals a tip will not count towards the National Minimum Wage. The Government also wants 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.”