National Minimum Wage (NMW) updates

9 June 2009

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The Government has announced that the NMW for workers aged 22 and over is to increase by 7p to £5.80 per hour as of 1 October 2009.

The rate for 18 to 21-year-olds will rise from £4.77 to £4.83, while for 16 and 17-year-olds, the statutory rate will go up to £3.57 per hour (from £3.53).

They have also announced that as of 1 October it will no longer be legal for employers to use tips to top up wages and qualify as a minimum wage.

This means that when a customer leaves a tip for staff, in a restaurant or anywhere else, they can be sure that it will not be used to make up the minimum wage, This means that employers will no longer be able to use tips meant as a bonus for staff to boost pay levels.

The announcement is in response to a consultation on the use of tips, gratuities, service charges and cover charges in payment of the national minimum wage. The Government's full consultation response on service charges, tips, gratuities and cover charges can be found here.

Under rules in place since the introduction of the NMW, where tips and gratuities are given directly to workers by customers and are retained by the workers without any other party being involved, they cannot count towards NMW payment.

Currently, where service charges, tips, gratuities and cover charges are paid by the employer to the worker via the payroll then the tip can count towards national minimum wage pay.

The Government has also accepted a Low Pay Commission (LPC) recommendation that the adult rate of the minimum wage should be extended to 21-year-olds, which will be implemented from October 2010.

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