Tipping and the Minimum Wage

Business Secretary John Hutton has said there needed to be more transparency in tipping. In a recent BBC report he called on employers to make it clear how tips were distributed so that customers knew where their money was going - and whether or not the establishment operated a fair tipping policy.

“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.”

Legal changes are afoot that will mean employers are to be banned from using tips and service charges to “top up” staff pay to meet the minimum wage. Firms are currently allowed to divert service charges into takings. Unions have welcomed the move, saying that not allowing employees to have tips in addition to pay is an “abuse”.

TUC General Secretary Brendan Barber said that presently “unscrupulous” employers could “cheat” workers out of tips that were meant for them. GMB General Secretary Paul Kenny said “Far too many rogue employers have been using tips to make up the national minimum wage,” he said. The quicker this is ended completely the better.”

Derek Simpson, joint leader of the Unite union has said, “Waiters and waitresses across the country have been hungry for the tips loophole to be closed and the announcement … will satisfy their appetites. It is great news that unscrupulous employers will no longer be able to use the tips left for staff to subsidise low wages.”

The union intends to introduce a “Fair Tips” logo in bars and restaurants across the UK - showing that staff receive at least the minimum wage as well as all tips. The minimum wage currently £5.52, rises to £5.73 on 1st October.