When we launched our campaign for transparency in tipping, we highlighted the way in which some establishments use customers' tips to make the wages of their staff up to the legal minimum. Our argument was that tips are tips – a compliment paid by the customer to the individual server – and that the minimum wage is what employers are legally bound to pay their staff. For tips to be used in this way defeated the whole purpose of the minimum wage. A tip should always be a little something extra.
Well, we might think that, and you might think that, too. But it turns out that the way the Government defined the minimum wage was rather different. As we report today, the then Department of Trade and Industry reached a tacit agreement with the hospitality sector that allowed service charges – though not cash tips – to be used in this way. It was the price employers exacted in return for agreeing not to oppose the introduction of a minimum wage.
It is perhaps understandable that at that time ministers saw acceptance of the minimum wage, in principle, as the priority, even if the practice was initially flawed. Amendments could be made later. Far less honourable is the way in which they have trumpeted the minimum wage as one of their signal achievements, even though they knew it to be severely flawed.
It has been a disgracefully long time in coming, but we welcome the change of heart by Ian McCartney, the minister who drew up the legislation. After 10 years, he says, it is time for such loopholes to be closed. Better late, you might say, than never.