DEPARTMENT FOR
BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release (2008/274)
issued by COI News Distribution Service. 19 November 2008
The Government
today launched a consultation on proposals to make tips fairer for
hard-working service staff across the UK.
Under the plans, employers will be banned from using any tips or
service charges towards payment of the national minimum wage.
Employment Relations Minister Pat McFadden said:
"When people leave a tip they expect it to go to staff on
top of their pay, not to be used to make up the minimum wage. This
is an issue of fairness and common sense.
"We intend to amend regulations so that tips can no longer
count towards payment of the National Minimum Wage.
"We also want employers to make it clear how they distribute
tips so that customers know where their money is going.
"It's crucial we get these changes right and we are
keen to hear everyone's ideas as part of our consultation."
As well as inviting comments on proposals to change the rules so
that tips are paid on top of the national minimum wage, the
consultation will also look at ways of improving information for consumers.
When changes to the law take effect, a Code of Practice could
provide guidance on issues such as how to distribute tips and
inform customers about their policy on tips and gratuities.
Notes to Editors
1. The consultation closes on 16th February 2009. To find out
more about this consultation visit: http://www.berr.gov.uk/consultations/page48902.html
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 service charges, tips, gratuities and cover charges, are
paid by the employer to the worker via the payroll then the tip
can count towards national minimum wage pay.
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 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.