News Release issued by
the COI News Distribution Service on 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 tomorrow, are:
· Low paid workers aged 22 and over get an increase from £5.73 to
£5.80 an hour.
· 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."
Notes to Editors
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 Customs.
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 businesslink.gov.uk/payandworkrights.
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.
Contacts:
BIS Press Office
NDS.BIS@coi.gsi.gov.uk
Joe Upton
Phone: 020 7215 5959
Joe.Upton@bis.gsi.gov.uk