Tipping the balance

The National Minimum Wage (NMW) was the flagship policy of the first term New Labour Government. It directly benefited around two million workers and in every year since, until this year, was raised above the level of inflation.

The NMW has been criticised for being too low, and consecutive London mayors have backed a higher London living wage. However two loopholes remain for unscrupulous bosses: the lower youth rates and the ability to use tips to make up the pay to the level of the NMW.

It is this latter loophole that the Government is considering closing in a consultation. In the foreword Peter Mandelson, Secretary of State for Business, Enterprise and Regulatory Reform (BERR), states "our view is that tips should be paid to the worker on top of their pay" instead of being used to make up the NMW.

Despite this apparent clarity the consultation document is peppered with phrases such as the "cost to the sector", "administrative burdens", "flexibility to employers", the importance of "protecting jobs", especially given the "adverse market conditions". Trade unionists will therefore be arguing that the Government does not delay implementation because of the recession.

The agreement to end this practice was announced following the 'Warwick II' talks in July, yet it has taken the Government over four months to open a consultation, which does not close until February – with legislation unlikely to come into force until a full year after the agreement.

Trade unions and socialists in Parliament will need to ensure the timetable does not slip further. Last year 95 MPs (over three-quarters of them Labour) signed an EDM supporting the Unite Fair Tips Charter Campaign, and calling for the abolition of this loophole. As far back as 2003, Labour MP Michael Connarty introduced a bill to remove this practice, which the Government then blocked.

The exclusion of tips is also supported by the Scottish TUC, whose Deputy General Secretary Dave Moxham stated, "very few people realise that some unscrupulous employers are lining their pockets with the tips which customers leave to thank the staff who serve them."

However, when people do realise they are outraged – as they were when it was exposed earlier this year that the Carluccio's chain of restaurants pay their waiting staff just £3.75 per hour as a basic wage – which seemed generous compared with the Hard Rock Café chain which paid some staff as little as £2.06 per hour before tips.

The consultation document can be downloaded from the BERR website, and the deadline for responses is 16th February 2009. Ensure that you or your trade union branch responds.