Government bans practice of using gratuities to top up staff pay

Using tips left by customers to make up workers' pay to minimum wage levels is to be outlawed from October, the Government has announced.

Following a lengthy campaign by unions against restaurant chains including Carluccio's, Café Rouge, Strada and Caffé Uno, the practice of 'funneling tips into paying basic wages’ will now be against the law.

In addition other chains such as Zizzi and ASK who failed to pass on gratuities on credit and debit cards as rewards will also have to alter their policies.

Under the current law, restaurateurs are legally entitled to do more or less whatever they wish with tips. Service may or may not be included in the bill, typically with a "discretionary" 10 per cent or 12.5 per cent service charge.

Now restaurant workers will be guaranteed fair wages, while customers will be confident their tips will not be used to make up staff pay.

Making the announcement, Employment Relations Minister Pat McFadden 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.

"Our consultation showed wide support for these changes, including from business groups, and we are working with them to ensure that consumers get the information they need."

The campaign for fair tipping won the backing of leading chefs, including Marco Pierre White and Gordon Ramsey as well as politicians and a number of restaurant guides.

Owner of Acton's North China Restaurant Lawrence Lou told us: "Here at the North China we always pay our staff at least the minimum wage. Any tips paid on top of the final bill go directly to the waiter."

May 8, 2009