Tips given to restaurant staff can no longer count towards payment of the National Minimum Wage (NMW), the government has announced.
Business secretary John Hutton said he planned to amend the regulations to mark the 10th anniversary of the landmark NMW legislation.
The changes will end the practice of employers using gratuities and service charges processed through the payroll to top up staff wages to the £5.52 per hour minimum wage, which rises to £5.73 on 1 October.
Last month the High Court ruled that tips should not count towards the minimum wage in the case of HM Revenue & Customs v Annabel’s.
Hutton also revealed proposals for making tipping practices fairer.
“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,” he said.
“We also want to encourage employers to make it clear how tips are distributed so that customers know where their money is going and whether or not the establishment operates a fair tipping policy.”
A consultation on implementing the government’s recommendations will be launched in the autumn. Guidance for both workers and employers will be issued in time for the changes – expected to be 2009.