No more pay "that is not paid through the payroll"

By: Karl Limpert

Date: 30 July 2009

The minimum wage is due to increase by £0.07 to £5.80 from 1st October. But more importantly for some businesses in the service industry is the plan to omit "that is not paid through the payroll" from the legislation.

For businesses in the service industry, this small edit to the law will have a more significant impact in two months time than the 7 pence increase, as the National Minimum Wage Regulations will have these words deleted, making it illegal to use tips to make-up the minimum wage.

While due to come into force on 1st October, the information is in no way easy to find. It is available on the Dept for Business, Innovation & Skills' website, but tucked away in consultations – Government's decisions on the treatment of tips & gratuities for the minimum wage, although it doesn't get a mention on the Pay & NMW page, and the associated Business Link's page only refers to current law, with no reference to these changes.

Small businesses that currently make use of tips to supplement the wages paid to staff need to ensure they're ready for these changes, and with it being only two months, planning budgets should be well under way now.

The actual line of legislation that will come into force on 1st October, a draft of which is available from the Office of Public Sector Information simply states: ‘In regulation 31(1)(e) of the Principal Regulations (reductions from payments to be taken into account) omit "that is not paid through the payroll".' Simple, but very significant for a lot of businesses.

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