The British Hospitality Association (BHA) has once again warned that many waiting staff will actually be worse off when restaurants are prevented from topping up minimum wage with tips.
The Department of Business, Enterprise and Regulatory Reform (BERR) is tomorrow expected to unveil proposals to end the practice, in the wake of a long-running campaign by the Unite union and the Daily Mirror and more recent one from the Independent.
But BHA chief executive Bob Cotton, who met with BERR officials yesterday, warned that proposals have not been thought through.
"At present, they have a potentially highly unfavourable impact on pay for staff," he said. "The only person to gain will be the tax man."
Under the current system, tips distributed via a ‘tronc' are not subject to national insurance (NI) deductions.
But if the service charge is not used as part of the minimum wage, the whole minimum wage payment is subject to both tax and NI contributions, leaving staff many pounds a week worse off, as well as increasing costs for the employer, Cotton said.
"If the government wants to make these changes, they should be considered over a longer period than is being proposed so that adjustments can be made to wages and selling prices," he added.
By Daniel Thomas
E-mail your comments to Daniel Thomas here.