Hutton serves up a fair deal on tips
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Released 31 July 2008
The Government today announced plans to amend regulations so that tips can no
longer count towards payment of the National Minimum Wage, as it celebrates the
10th anniversary of its landmark NMW legislation.
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.
Business Secretary, John Hutton, also revealed proposals for making tipping
practices fairer and emphasised the importance of improving transparency.
"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.
"This is an issue of fairness and common sense and it's one many people
clearly care a lot about.
"Under the current law, all workers are already entitled to receive the
minimum wage. The changes we're proposing will mean that in the future, tips
cannot count towards payment of the minimum wage.
"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."
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.
1. Employment Relations Minister Pat McFadden will today (Wed 30th July)
visit Pizza Hut at 4.30pm, 29-31 Regent Street, Haymarket, London,SW1Y 4NQ
Piccadilly in order for broadcasters to film embargoed footage and interviews
for this announcement. Please contact Alexandra Thompson 020 7215 5964 if you
wish to attend.
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
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 increase from £5.52 to £5.73 from
October 2008, with the rate for 18-21 year olds increasing from £4.40 to £4.77
and the rate for 16 and 17 year olds going up from £3.40 to £3.53.
4. From October 2008, the minimum wage (adult rate) will provide, 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.
6. The Department for Business Enterprise and Regulatory Reform helps UK
business succeed in an increasingly competitive world. It promotes business
growth and a strong enterprise economy, leads the better regulation agenda and
champions free and fair markets. It is the shareholder in a number of
Government-owned assets and it works to secure, clean and competitively priced
About the Author
© Crown Copyright. Material taken from the BERR- Department
for Business, Enterprise and Regulatory Reform replacing DTI - Department for
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Article Published/Sorted/Amended on Scopulus 2008-07-31 13:54:55 in Business Articles