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Minimum Wage (Tipping)

Volume 503: debated on Thursday 14 January 2010

4. What estimate he has made of the number of people who are likely to be affected by regulations governing the use of tips to make up levels of pay to the national minimum wage rate. (310578)

The Government estimate that just over 60,000 workers could benefit from the change to the minimum wage regulations. This will prevent tips from being counted towards the national minimum wage. Customers do not expect the tips that they leave to be used to make up the minimum wage, and the changes that we have introduced mean that tips can no longer be used in that way.

I thank the Minister for his reply and I welcome the new regulations. For many young people, waiting in restaurants is their first engagement with the world of work, and it is very disillusioning for them to have the rewards for their hard work taken by unscrupulous employers. Will he ensure that, following the introduction of the regulations, the situation is monitored and that any unscrupulous employers are exposed as a result?

My hon. Friend makes an important point. Alongside the change in the law that we have made, we need proper enforcement and proper transparency in regard to what happens to tips. The public have a right to know what happens to the money that they voluntarily leave to reward the service they receive. The Government have also toughened up the law on the enforcement of the minimum wage, and there are now better arrears systems for employees who are not paid the minimum wage and tougher penalties for the minority of employers who do not pay it. We have also brought together the helplines for different rights at work to form a single pay and work rights helpline, which will make it easier for people to report abuses. The number is 0800 9172368.

My daughter recently worked in a restaurant, which had an optional service charge of 12.5 per cent., but none of that went to the staff. Is that not scandalous?

That is precisely why, alongside the change in the law to make sure that tips and gratuities cannot be used to make up the minimum wage, we want the industry to promote a code of transparency to ensure that the customer knows exactly what happens to the money they give. If I went into a restaurant and thought that the staff were not receiving anything of the tip, why would I leave one? I want to reward for the service we receive, and that is what the customer wants. That is why we have changed the law and want to see more transparency in addition to it.