Employment law
News: Changes On Using Tips To Pay National Minimum Wage Announced
- Date: 27/05/2009
- Author/Solicitor: Nick Arron
You will remember that the Government have been consulting on stopping employers using tips to make up staff pay to national minimum wage levels. They have now announced that this will no longer be legal from the 1st October this year.
Up until this date, where service charges, tips, gratuities and cover charges are paid by the employer to their staff via the payroll then the tip can count towards to national minimum wage pay. From the 1st October, this will no longer be possible. Tips pooled and paid by the employer via the payroll will be treated as tips given directly to workers by customers. They become an addition to their pay and a reflection of discretionary gratuity from customers. Many will say this has always been the purpose of tips. They should not have benefited the employer but should have gone direct to the employee. The change on tips provides greater certainty to customers that tips they give end up in the pockets of staff as opposed to employers.
There has generally been wide support for the changes despite the increasing costs to the industry during these difficult times. Estimates on the cost vary. The majority of employers have not been using tips towards the national minimum wage.
Currently the national minimum wage for adult workers is £5.73, for 18 to 21 year olds £4.77 and for 16 and 17 year olds, £3.53. The national minimum wage is going up again on 1st October to £5.80, £4.83 and £3.57. There is also talk of changing the "bands" so that 21 year olds get the top level.
The Government is reviewing the low paid commission recommendation on minimum wage rates, which will take effect in October of this year and we will update you once a decision has been made
For more information please contact Nick Arron