Service Areas: Employment Law, Hospitality
New legislation to prevent different forms of tip being used in payment of the national minimum wage
Since the national minimum wage came into force 10 years ago it has been legal for tips, service charges, gratuities and cover charges to count towards payment of the national minimum wage, providing payment is made through the employer’s payroll.
Last year the Government carried out a consultation with consumers, unions and businesses following concern about how tips were being used. The majority of respondents to the consultation agreed that change was needed to prevent forms of tip being used in this way.
As a result the Government has now confirmed that as of 1 October 2009 all tips, service charges, gratuities and cover charges, whether discretionary or mandatory, will be excluded from counting towards the national minimum wage. This means employers will no longer be able to use various forms of tip to ‘top up’ employees wages to meet the national minimum wage requirements.
This change will principally affect our hospitality clients and businesses in this sector may incur an increase in labour costs as a result. Employers should ensure correct procedures are put in place before the change takes effect on 1 October 2009.
If you have any queries regarding this change or want to discuss any other employment matters please do not hesitate to contact Cheryl Edmonds, Employment Partner and member of our Hospitality Practice Group by email at
lonemp@steeleslaw.co.uk
or on 0207 421 1720.
Published:
7 May 2009