In response to its consultation on service charges, tips, gratuities and cover charges, the Government has announced that it is to legislate to prevent tips from being used to top up wages in order that they meet the national minimum wage (NMW). Despite calls from business leaders to delay implementation until the economy recovers, the change will come into effect from 1 October 2009.

Currently, the NMW Regulations 1999 provide that service charges, tips, gratuities and cover charges that are not paid to workers through payroll do not count towards the NMW. On the other hand, when such payments are collected by the employer and paid to workers through payroll, these do count towards the obligation to meet the NMW.

In order to establish a clearer system, particularly for the benefit of workers and consumers, the Government has decided to prevent all of these different forms of tip from counting towards the NMW.

There is to be further consultation on a code of practice on tipping. For further information follow this link