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Minimum Wage can’t include tips, says HMRC

In plans announced by the Government on the anniversary of Minimum Wage legislation, regulations will be amended so that customer tips in bars and restaurants will no longer be counted towards payment of the National Minimum Wage. 

The changes are aimed at stopping the controversial practice of employers using tips and service charges to top up workers' wages to make sure they comply with the statutory adult rate of £5.52 an hour.

Business Secretary John Hutton said: "Hundreds of thousands of people in the UK have jobs in sectors where tipping is commonplace. When people leave a tip, in a restaurant or elsewhere, they expect it to go to service staff and as consumers, we've got a right to know if that actually happens.

"This is an issue of fairness and common sense and it's one many people clearly care a lot about. Under the current law, all workers are already entitled to receive the minimum wage.

"The changes we're proposing will mean that in the future, tips cannot count towards payment of the minimum wage.

"We also want to encourage employers to make it clear how tips are distributed so that customers know where their money is going and whether or not the establishment operates a fair tipping policy."

The Government and unions have also proposed extending the adult Minimum Wage to 21-year-olds; currently a worker's 22nd birthday triggers entitlement.

A consultation on implementing the Government's recommendations to prevent tips counting towards the Minimum Wage will be launched in the autumn and the regulations, including guidance for both workers and employers, are expected to be changed in 2009.

As part of its Fair Tips campaign, the Unite union intends to display its logo in bars and restaurants across the country as a sign that they pay their staff at least the minimum wage with all tips paid on top.

From 1 October 2007 the minimum wage for workers aged 22 or over was increased to £5.52 an hour, rising to £5.73 an hour from October 2008.

For 18 to 21 year olds it is currently £4.60 an hour, rising to £4.77 an hour from October 2008, and for 16 to 17 year olds it is £3.40 an hour, rising to £3.53 an hour from October 2008.

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