Victory for <i>Independent</i> in fair tips campaign

Proposals to stop restaurants creaming off tips to pay basic wages are being announced today.

In a victory for The Independent's "fair tips" campaign, the Employment minister, Pat McFadden, will say the Government will close a legal loophole that allows employers to top-up pay to the national minimum level. The restaurant industry will also come under pressure to tell diners what happens to tip money which they leave on tables or credit cards.

Commenting in advance on the consultation, Mr McFadden said: "When someone leaves a tip in a restaurant, they expect it to go to the staff on top of their pay, not to be used to make up the minimum wage."

As revealed in The Independent, many large dining chains, as well as some smaller restaurateurs, keep some of the £4.7bn tips left annually rather than passing them on to staff. Among the chains that dip into the service charge to pay basic wages are Carluccio's, Café Rouge, Strada and Caffé Uno. In our campaign, we called on the Government to close the loophole in the minimum wage law and for all restaurants to operate a fair, clear and transparent policy for distributing service charges and gratuities to staff.

The campaign, which began on 15 July, won the support of the Prime Minister and MPs from all parties.

In the consultation, being launched by the Department for Business, Enterprise and Regulatory Reform, the Government will seek views on its proposal to stop tips and service charges counting towards the minimum wage, and towards greater clarity on treatment of service charges. "Our view is that tips should be paid to the worker on top of their pay," a spokesman for the department said.

The proposals are likely to result in a code of conduct being drawn up for the restaurant industry on service charges.