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Clawback on Tips gets Customer criticism

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Restaurants are following the letter of the law in implementing new rules on tipping, which are designed to boost wages for waiting staff, but many are ignoring the spirit of the legislation and charging staff an administration charge for tips left on credit cards. It's a move that's earning negative publicity amongst customers for many of the bigger chains, and employment law advisers are reporting concerns amongst smaller local restaurants on how to manage the change. Under the new legislation, which was introduced in October, any business which passes on tips and service changes to staff has to match up to new rules under the national minimum wage. Until recently employers were allowed to treat tips and service charges as part of an employee's pay for the purposes of the national minimum wage (NMW) provided they were paid to the employee through the payroll and the amounts were shown separately on the employee's payslip. But following a review by the Government, gratuities are no longer allowed to count and employers must ensure that all employees receive current national minimum wage before adding on tips or service charges. Said Jonathan Insley, Employment expert with Chelmsford Lawyers, Gepp & Sons: "As well as tackling the minimum wage, the Government review also flagged up concerns that the tips and service charges collected are not being distributed to employees in full, and called for greater transparency from employers and for them to demonstrate a fair tipping policy. "Whilst employers generally seem to be up to speed on implementing the legislation, many are interpreting the law as tightly as possible and seeing where they can hold down increased costs." "It's a balancing act for restaurant owners and others in the hospitality sector," he added. "The new rules equate to an average rise in wages of around 10% for the average restaurant which is not good news when fewer people are already eating out, but I think for many restaurateurs we are working with, keeping their good name is as important as following the letter of the law." The above is not legal advice; it is intended to only provide information of general interest about current legal issues. • For additional information or comment please contact: Jonathan Insley of Gepp & Sons.

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