Service industry under pressure to meet minimum wage standards
The government may face difficulty in enforcing a ban on employers using tips and service charges to meet the national minimum wage, say lawyers.
Speaking at the 10th anniversary of the introduction of the minimum wage, Business Secretary John Hutton announced that the government intends to close the loophole allowing service industries to use tips to supplement wages to bring them in line with the statutory minimum. Hutton said: “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.”
Diane Parker, partner at Atherton Godfrey solicitors, says: “The government, whilst well meaning, with may well have difficulty enforcing these proposed changes, other than leaving it to employees to enforce their own rights in the employment tribunal.”
Parker says that most breaches are picked up by HM Customs and Revenue for PAYE purposes, with those found guilty being made subject to fines and prosecutions. Difficulties exist, however, in identifying where employees are receiving tips in addition to the national minimum wage because the employer is putting the tips through the PAYE system.
“Given that many who work in service industries where tips are commonplace, tend to be short term, often new immigrants or even those working on visas, leaving them to take their case to employment tribunals as the only enforcement method will continue to leave such employees vulnerable to abuse, because either they are not aware of or are unable to seek advice on their rights,” Parker adds.
