Business News

Tips Don’t Count Towards The NMW

As you may be aware the National Minimum Wage (NMW) rates increased from 1 October 2009 to:

  • an adult rate of £5.80 an hour. This is payable to those age 22 and over.
  • a development rate of £4.83 for those aged 18 – 21
  • and for 17 year olds a rate of £3.57 an hour.

A change was made from the same date, to the elements of pay which can count towards the payment of the NMW rate. Tips, gratuities, cover charges and service charges do not count from 1 October 2009 towards NMW in any circumstances. This is a change to the previous rules which allowed such payments to count towards the NMW rate in certain circumstances.

As detailed on the Business Link website:

“…before 1 October 2009, tips, gratuities, service charges and cover charges did count towards the NMW as long as you paid them to your workers through your payroll. They no longer count towards the NMW, regardless of whether they are paid through your payroll or are given direct to workers by customers or a tronc master.”

If you have any queries on the NMW, or how this change impacts on your employees, please do get in touch.

Internet links: Business Link Website and Employer Bulletin