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Government bans tips from making up minimum wage

British employers will be banned from using tips to bring workers' pay up to the minimum wage from October, the government said on Wednesday.

world Updated: May 06, 2009 21:18 IST

British employers will be banned from using tips to bring workers' pay up to the minimum wage from October, the government said on Wednesday.

The move follows an investigation into how tips, service and cover charges were used as part of employee salaries, particularly in the hospitality sector, said Employment Relations Minister Pat McFadden. "This is a basic issue of fairness. We do not believe employers should be able to use tips meant as a bonus for staff to boost pay levels to the legal minimum," he said in a statement.

McFadden said the government is working with consumer and business groups on a potential voluntary code for businesses to
promote clear tipping practices.

Workers aged 22 and over receive 5.73 pounds per hour under the minimum wage. Those aged 18-21 get 4.77 pounds an hour, according to the Department for Business.

Derek Simpson, joint general secretary of the Unite union, which represents many hospitality industry workers, welcomed the government's decision to close the loophole. "This is a triumph for the poorly paid in restaurants, bars and hotels across the country," he said in a statement, although he warned that the union was "unconvinced" that a voluntary code on tipping practices would work.