BERR has just issued the Government's Response to its Consultation on Service Charges, Tips, Gratuities and Cover Charges. The National Minimum Wage Act 1998 came into force in 1999 and since then it has been legal to use service charges, tips, gratuities and cover charges towards payment of the national minimum wage when payment is made through the employer's payroll.
The responses to the consultation came from a broad spectrum of interested parties: from individual customers, to business and trade unions and bodies. Unsurprisingly, those on the employee and customer side support the change in the law while business and trade bodies suggest delaying the change until the economic climate improves. However, the majority of responses support the change. So on that basis, the government, having taken evidence from stakeholdes and having carried out an impact assessment, believes the time is now right to change the law to create a level playing field in wages paid by employers. The government's response states that it will also create equity for employees, plus create transparency for the customers leaving tips in good faith for the employee so that they will know how their money is to be used.
The government states it is working with the Hospitality, Leisure and Service Sectors to ensure there will be no unnecessary additional administrative burdens on employers.
The change in the law will come into effect on 1 October 2009. (The current National Minimum Wage is £5.73 per hour.)
How will it affect your business? Will it cost you more or are you already paying tips in addition to the national minimum wage?
Disclaimer: the contents of this blog are not intended form the basis of legal advice. Independent legal advice should be taken from your own solicitor for all cases.
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