The changes to the minimum wage rules, which are expected to take force in 2009, will mainly affect the restaurant industry in which tipping is commonplace. Many employers in the industry currently divert service charges and tips into their “takings” and use the takings to pay the workers the minimum wage.

As expected the plans have met with the approval of the trade unions who have called for years for the tipping loophole in the minimum wage laws to be closed. The impact of the new rules will be that there will be greater transparency for the customer as to how the tip or service charge they pay has been distributed and arguably a fairer deal for workers in what is a low paid industry. However, hard hit restaurateurs are likely to argue a different case, claiming that they have already been hit considerably by the current economic climate and the high price of food and raw materials, and that this plan provides yet another hammer blow to their attempts to survive the so-called credit crunch.

The current minimum wage is £5.52, and this will increase to £5.73 on 1 October this year.

For expert advice on this or any other Employment Law matter, please contact James Johnson on 01332 225 271 or email james.johnson@smithpartnership.co.uk

Back to Press Release list

Press Releases

Employers are to be outlawed from using tips and service charges to “top up” workers wages in order to meet the National Minimum Wage under proposals announced by the Government.