Mandelson Serves Up Fair Deal On Tips And Announces New Minimum Wage Rates
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Issued 30 September 2009
New rules come into force tomorrow (1 October) to ensure that thousands of
workers get a fair deal on tips and wages.
The changes make it illegal for businesses to use tips to bring staff pay up
to minimum wage levels.
They come into effect on the same day as new increases to national minimum
wage rates which will benefit up to one million people.
Business Secretary Lord Mandelson said:
“When I leave a tip I don’t expect it to be used to make up the minimum wage.
I want it to go to the person who has served me as a thank you for their
service. This is a basic issue of fairness. Tips are meant as a bonus – not a
tool to boost pay to the basic minimum.
“That’s why the Government has closed this legal loophole. Thanks to the help
and support of Unite, the British Hospitality Association, the CBI, Consumer
Focus and other stakeholders we are also able to launch a new code of best
practice today. This will promote good tipping practices amongst businesses and
ensure that consumers are clear about what happens to their money.”
The action on tips is the latest development in the 10 year history of the
National Minimum Wage. The new rates for this year, which also come into effect
· Low paid workers aged 22 and over get an increase from £5.73 to £5.80 an
· The rate for 18 to 21-year-olds has risen from £4.77 to £4.83.
· For 16 and 17-year-olds, the rate has gone up to £3.57 an hour from £3.53.
Business Secretary Lord Mandelson said:
“The National Minimum Wage remains one of the most important rights for
workers. It has made a real difference to the lives of the UK’s lowest-paid
workers. It protects them from exploitation and also creates a level playing
field for business, making a huge contribution to the UK’s economic success.”
Consultation during the development of the Government’s policy on tipping has
shown wide support for the changes, including from business groups, unions and
consumer groups. The code of practice will be closely monitored to ensure that
it is a success, with a review in one year's time.
Derek Simpson, Unite joint general secretary said:
"There is now an urgent need for the hospitality industry to be transparent
in how they handle the tips and service charge money left for staff. The Code
launched today will help consumers see where the money left for good service is
going. Unite is looking to the sector to adhere to the best practice principles
and ensure that customers have the information they need to make an informed
choice before they leave a tip or service charge. Unite wants to see all
employers sign up to the Code and ensure that their staff and customers can be
confident that staff are treated fairly."
1. Under rules in place since the introduction of the National Minimum Wage,
where tips and gratuities are given directly to workers by customers and are
retained by the workers without any other party being involved, they could not
count towards NMW payment. Where service charges, tips, gratuities and cover
charges, are paid by the employer to the worker via the payroll then the tip
could count towards national minimum wage pay. The change to regulation that
comes into force on 1 October means that no tips, service charges, gratuities or
cover charges can be used to pay the NMW.
2. As with all NMW issues, the law will be enforced by Her Majesty’s Revenue and
3. The latest NMW rates were recommended to the Government by the independent
Low Pay Commission. The Low Pay Commission was established following the
National Minimum Wage Act 1998 to advise the Government about the National
Minimum Wage. Its commissioners include representatives from business groups,
trades unions and academics.
4. Workers who want advice about their workplace rights, including the NMW,
or to report abuses of those rights can call the Pay and Work Rights helpline.
The helpline number is 0800 917 2368. The textphone number is 0800 121 4042.
Information is also available on direct.gov.uk/payandworkrights and
Department for Business, Innovation & Skills
The Department for Business, Innovation and Skills (BIS) is building a
dynamic and competitive UK economy by: creating the conditions for business
success; promoting innovation, enterprise and science; and giving everyone the
skills and opportunities to succeed. To achieve this it will foster world-class
universities and promote an open global economy. BIS - Investing in our future.
About the Author
© Crown Copyright. Material taken from the Department for
Business, Innovation & Skills. Reproduced under the terms and conditions of the
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Article Published/Sorted/Amended on Scopulus 2009-09-30 11:24:18 in Employee Articles