Tipping Point

The Government has announced that it will amend the law so that tips can no longer count towards payment of the National Minimum Wage (NMW).

This means that employers will no longer be able to use gratuities and service charges processed through the payroll to “top up” staff wages to meet the current hourly NMW rate of £5.52 (£5.73 from 1 October).

The Government will launch a consultation on implementing these recommendations in the autumn. It will then issue guidance for both workers and employers to ensure a smooth transition when the regulations are changed, probably in 2009.

Currently, when tips and gratuities are given directly to workers by customers and are retained by the workers without any other party being involved, they cannot count towards NMW payment.

Where there is evidence that cover charges, service charges, tips and/or gratuities are paid by the employer to the worker via the payroll then the tip can count towards NMW pay.