Unions attack plan to count tips in wage calculation

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A proposal that tips to waiters and waitresses and other low-paid workers should count towards the national minimum wage was yesterday attacked by left-wingers and unions but welcomed by employers.

The unpublished report of the Low Pay Commission, currently under consideration by ministers, argues that payments by results, commission, bonuses and gratuities which are paid through the payroll, should be included in calculations on a statutory pay floor.

Donna Covey, of the GMB general union, said that a "clear and ambiguous" minimum wage should apply to everybody. "The tip is something the customer leaves occasionally in reward for exceptional service. It is not a subsidy for bad employers," she said.

It is understood that "cash-in-hand" tips would not be included, unless they go into a central pool which is then distributed in the form of wages.

Representatives of companies in the service sector said that tips made up a high proportion of the earnings of some employees in the leisure and hospitality industry, particularly for staff in restaurants.

Brigid Simmonds, chief executive of Business in Sport and Leisure, which represents some of the biggest companies in the sector, said that many employers paid their waiters and waitresses a lower hourly rate because of their ability to earn tips. "Back-of-house staff" such as chefs and kitchen staff received a higher basic rate to ensure parity of earnings.

The Labour left-winger Jeremy Corbyn, said it was "plain meanness" to include tips for low-paid workers in the calculation because they often relied on gratuities to supplement their incomes. He argued that it would also be "almost impossible" to keep track of the additional payments. And Bharti Patel, director of the Low Pay Commission, said the proposal to include tips made a "mockery" of the minimum wage.

The report from the commission calls for an adult rate of pounds 3.60 and a "development rate" of pounds 3.20 for 18- to 20-year-olds. Gordon Brown, the Chancellor of the Exchequer, wants a lower minimum rate for young workers so that more employers will be encouraged to take them on as part of the flagship New Deal programme for the unemployed.

John Monks, TUC general secretary, yesterday urged the Government to implement the commission's recommendations in full.