New rules for tips and wages

Businesses in the hospitality sector can no longer subsidise staff pay with tips.

The regulations comes into force today with new increases to national minimum wage rates.

Business secretary Lord Mandelson says: ‘When I leave a tip I don’t expect it to be used to make up the minimum wage. I want it to go to the person who has served me as a thank you for their service. This is a basic issue of fairness. Tips are meant as a bonus.’

Derek Simpson, Unite joint general secretary, says: ‘There is now an urgent need for the hospitality industry to be transparent in how they handle the tips and service charge money left for staff.’

As of 1 October the new minimum wage for workers aged 22 and over has increased to £5.80 from £5.73 an hour. The rate for 18 to 21-year-olds has risen to £4.83 from £4.77, while 16 to 17-year-olds must now be paid £3.57 as opposed to £3.53.

Related Topics

Hospitality industry