Tips can no longer count towards workers’ wages
Employers are no longer allowed to use tips to bring their workers' salaries up to minimum wage, it has been decided.
Unite, the UK's largest union, had been campaigning for the loophole to be closed after seeing a number of restaurants and bars cutting costs by counting tips towards employee salaries. The Government made the practice illegal on 1st October, with Business Secretary Peter Mandelson commenting:
"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 is why the Government has closed this legal loophole."
The Federation of Small Businesses (FSB) has greeted the decision, saying that the ruling will help small businesses compete more closely with larger organisations. John Wright, Chairman of the FSB, said:
"Big businesses have been using this loophole to keep their own costs down, which abuses their customers' trust when they give tips in good faith. It also creates an unfair playing field and means small firms, which pay their staff a decent hourly rate and let them keep tips on top, simply cannot compete."
The Government also confirmed that the National Minimum Wage was being raised on the same date by 7p an hour to £5.80, and by 6p an hour to £4.83 for 18-21 year olds.
06/10/09
