Government serves up a fair deal on tips

Government serves up a fair deal on tips

The Government has announced plans to amend regulations so that tips can no longer count towards payment of the National Minimum Wage, as it celebrates the 10th anniversary of its landmark NMW legislation.

Currently, where tips and gratuities are given directly to workers by customers and are retained by the workers without any other party being involved, they cannot count towards NMW payment. Where there is evidence that cover charges, service charges, tips and/or gratuities are paid by the employer to the worker via the payroll then the tip can count towards national minimum wage pay.

The changes will end the practice of employers using gratuities and service charges processed through the payroll to ‘top up’ staff wages to meet the £5.52 per hour National Minimum Wage, which rises to £5.73 on 1 October.

Business Secretary, John Hutton, also revealed proposals for making tipping practices fairer and emphasised the importance of improving transparency. “The changes will mean that in the future, tips cannot count towards payment of the minimum wage.” He added: “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 exercise will be launched in the autumn. Guidance for both workers and employers will be issued when the regulations are changed in 2009.  

Read more

Latest News

Read More

Leveraging Data to Drive Smarter Business Decisions in Law Firms

9 July 2025

Newsletter

Receive the latest HR news and strategic content

Please note, as per the GDPR Legislation, we need to ensure you are ‘Opted In’ to receive updates from ‘theHRDIRECTOR’. We will NEVER sell, rent, share or give away your data to third parties. We only use it to send information about our products and updates within the HR space To see our Privacy Policy – click here

Latest HR Jobs

University of Oxford – Harris Manchester CollegeSalary: £28,889 to £33,453 (FTE equivalent: £48,149–£55,755), inc. Oxford University weighting of £900 (FTE equivalent: £1,500) This provides summary

HRUCSalary: £43,077 to £45,540 per annum This provides summary information and comment on the subject areas covered. Where employment tribunal and appellate court cases are

University of Bath – Human ResourcesSalary: £30,805 to £37,174. Grade 6 This provides summary information and comment on the subject areas covered. Where employment tribunal

Miryco Consultants is working with a leading global asset manager, looking for an HR Business Partner for a 12-month maternity cover. This will be a

Read the latest digital issue of theHRDIRECTOR for FREE

Read the latest digital issue of theHRDIRECTOR for FREE