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Can tips count towards the minimum wage?🍴

Sometimes, cafés, restaurants, and bars try to use tips to make up wages.

If your wage is less than the minimum wage and they’re using tips to make it up to the minimum wage, they’re breaking the law.

If that happens to you, here’s what to do.

This article explains:

  • How to check you’re being paid the minimum wage in the first place
  • The basics of the law on counting tips towards the minimum wage
  • Why talking to the manager is the best first step
  • Why it’s better to have that conversation with other colleagues
  • If management refuses to pay minimum wage, how to report them to HMRC, start a grievance, start a petition, and join a Union to make your case stronger.

1) Check you’re being paid the minimum wage anyway

The first step is to check what the minimum wage actually is, because it goes up from time to time and it’s different according to your age. You can check here.

If you’re not being paid as much as that anyway, your employer is breaking the law. In that case, the best thing to do is report them to HMRC online here.

2) If your tips count towards the minimum wage, the place where you work is breaking the law

If you’re being paid minimum wage but only through tips, the place where you work is still breaking the law.

If you’re not sure you’re right about this, you can talk to ACAS for advice. They’re on 0300 123 1100 (they’re open Monday to Friday, 8am to 6pm) or search Acas Helpline Online.

3) Talk to others who work at the same place

If that’s happening, the best next step is simply to talk to others who work at the same place about the problem.

It’s often not a good idea to talk to your manager about it by yourself. They can ignore you, give you an excuse, or even sack you.

But if the management is using tips to make up your minimum wage, then they’re doing it to other people as well. Together, get together a group and arrange a time to talk about it.

Together, work out whether you think you can persuade your manager to stop paying minimum wage out of tips.

In other words, work out how much negotiating power you think you have. For example, if there are five of you working in the whole place and the manager needs you all to stay, then you have a lot of negotiating power.

But if you are only five out of a staff or thirty or forty, if you work at a chain where people come and go all the time and you think they can replace you easily, you have less negotiating power.

4) Speak to your manager about it

Arrange a time to speak to your manger, and then go as a group.

In that conversation you could mention that you know the law. Paying your tips out of minimum wage is against the National Minimum Wage Regulations 2015.

Part 10m says that a “service charge, tip, gratuity or cover charge” are “payments and benefits in kind which do not form part of a worker’s remuneration.”

If they agree to change the rules – well done!

If they don’t…

5) Option #1: HMRC

If you’re not confident about speaking to the manager about this, or if you ask and they say no, you can report them to HMRC – the government body which enforces the law on the minimum wage.

The advantage of this option is that HMRC has the power to enforce the law. The place where you work could be publicly shamed, fined, and in really bad cases, your employer could even be banned from running a company.

The disadvantage is that it can take a long time.

If you decide to speak to HMRC, the first step is to call ACAS and explain what has happened, on 0300 123 1100 (open Monday to Friday, 8am to 6pm).

Or you can report them to HMRC online here. The Minimum Wage team at HMRC investigate, and if they think you’re owed pay, they can make them pay, fine them, and publicly name them.

In 2017 they found that 16,000 workers doing all kinds of jobs were owed over £1.7 million in unpaid wages. Some employers had to pay fines. 

6) Option #2: Start a grievance procedure

Option 2 is to make a formal complaint to your employer, called a ‘grievance’.

If you do this, you have the right to be accompanied by a colleague, family member or Trade Union representative. It’s a good idea to involve a Union. Read section 8 below.

You can find out more about how to do that here.

7) Option #3: If you’re in a strong position, you could set up a petition on Organise

If you’re in a strong position, for example if you work for a big brand that cares about its reputation, or you’re confident that the company can’t afford to lose you, one option is to set up a public petition on the Organise Platform to explain that your company isn’t paying the minimum wage, then spread the word and get as many people as possible to sign it.

If you do this, make sure to use Twitter, Facebook, newspapers, journalists and friends of friends. You might be able to embarrass the management into changing their mind.

If you’re a journalist who might want to write about these stories, let us know if you’d like to have your name appear here at contactus@how-box.com or on the thread.

8) Option #2: Speak to Unite Union

I’d also recommend talking to your local branch of the Unite Union. They campaign about this.

If you and others join as a member, your bar or restaurant will be less likely to go back to paying the minimum wage with tips. It can also help if you have other problems in the future.

To get in touch, email Dave on dave.turnbull@unitetheunion.org

Over on our ‘Ask’ forum of Howbox, he’s written about this issue. He writes:

“It’s illegal for restaurants to top up your minimum wage with tips. I know it’s illegal because we helped make it illegal!

It used to happen all the time. Some places could have paid £0.50 an hour then said it was OK because staff got their minimum wage topped up from tips.

This issue had been coming up time and time again, so I called a meeting. When we started, it was six people. Everybody told us we weren’t going to succeed.”

But in the end, Dave and the Union’s campaign got the government to change the law. He’s written the whole story on the thread.

His advice is:

“If this is happening to you, don’t try to do something about it by yourself. You’ve got to turn this into a collective issue.”

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Has this information helped you? Is there anything wrong with this? Let us know! contactus@how-box.com

Does your manager try to pay you minimum wage with tips? Have you asked them to change? What happened? What advice would you give others in a similar situation? Join the discussion in the ‘Ask’ section, here.

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