Tips law change made at wrong time says BHA

The Government’s decision to outlaw the practice of topping up staff wages with tips has come at the wrong time, according to the British Hospitality Association.

Employment relations minister Pat McFadden announced today that from October it will be illegal for restaurants, hotels and pubs to use tips to make up the national minimum wage. Businesses will also be required to make their tipping policy much more transparent to customers.

The British Hospitality Association said although it was not against introducing legislation to make the practice illegal, the move would land the industry with a higher wage bill when it was struggling through a recession.

“We’re concerned that the Government has decided to introduce legislation in October this year rather than wait until the recession subsides,” said BHA chief executive Bob Cotton.

“This is not the time to introduce a measure that will increase the industry`s wage bill so significantly. The BHA will continue to work with the Department for Business Enterprise and Regulatory Reform on the transparency issue and is currently developing a code of practice for restaurants to ensure that customers are fully aware of the method by which tips and service charges are distributed.”

McFadden said the decision had come following a public consultation showing ‘wide support’ for the changes.

He said: "When people leave a tip for staff, in a restaurant or anywhere else, they have a right to know that it will not be used to make up the minimum wage. It is also important for employers to have a level playing field on wages.

"This is a basic issue of fairness. We do not believe employers should be able to use tips meant as a bonus for staff to boost pay levels to the legal minimum.”

The move was welcomed by some areas of the industry. A spokesperson for Pizza Hut said:
"We are pleased that the Government has finally closed the loophole that allows employers to top up staff wages with tips. We have always ensured our employees receive 100 per cent of their tips on top of wages and have been calling for an industry commitment to fair tips for some time."

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