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Minimum Wage (Tips)

Volume 499: debated on Thursday 12 November 2009

4. What assessment he has made of the effectiveness of measures to prevent tips being counted towards salaries in calculation of the national minimum wage. (299493)

Measures to prevent tips from being counted towards salaries in calculating the minimum wage were introduced by the Government on 1 October this year. The public do not expect the tips that they leave for staff to be used to make up the minimum wage, and the change that we have introduced brings clarity for customers, staff and employers. We will ask the Low Pay Commission to review the measure next year, as part of its annual reporting process.

In constituencies such as Cleethorpes, where many people work in the hospitality industry, this move has been widely welcomed, but can my right hon. Friend tell me whether there is still a difference if people tip via cash or credit or debit card? With one of those methods, the money used to go to staff, and with the other, it did not. Will he clarify the position?

Yes, I am very happy to clarify that. My hon. Friend is right that, in the past, the law treated tips differently depending on whether they were left by cash or by credit card. The change that we have made clarifies the position and makes it clear that all tips and gratuities, whether left by cash or by credit card, can no longer be used to make up the minimum wage. That is right; it is an important measure of justice for service workers; and it is entirely in line with the public’s expectations.