The Government today (31 July) announced plans to amend regulations so that tips can no longer count towards payment of the National Minimum Wage.

The changes will end the practice of employers using gratuities and service charges processed through the payroll to 'top up' staff wages to meet the £5.52 per hour National Minimum Wage, which rises to £5.73 on 1 October.

Employers argue that this is an essential part of running a low margin business model.

Business Secretary, John Hutton, also revealed proposals for making tipping practices fairer and emphasised the importance of improving transparency.

"Hundreds of thousands of people in the UK have jobs in sectors where tipping is commonplace. When people leave a tip, in a restaurant or elsewhere, they expect it to go to service staff and as consumers, we've got a right to know if that actually happens.

"This is an issue of fairness and common sense and it's one many people clearly care a lot about."

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