Small firms alerted to proposed changes to national minimum wage and other employment legislation which come into force tomorrow.
The Government has made a number of important revisions to UK employment legislation. The proposed changes will affect the National Minumum Wage (NMW), statutory redundancy payments, tribunal awards and gratuities.
The new rules will see the NMW increase to £5.80 an hour for eligible people aged 22 and above, and to £4.83 an hour for those aged 18 to 21. Meanwhile, the rate for those who are under 18, but above the compulsory school age, will rise to £3.57 an hour.
Business Secretary Lord Mandelson said: “The National Minimum Wage remains one of the most important rights for workers. It has made a real difference to the lives of the UK’s lowest-paid workers. It protects them from exploitation and also creates a level playing field for business, making a huge contribution to the UK’s economic success.”
Manufacturers’ organisation the EEF has called for a formula to determine future rises in the National Minimum Wage so employers have some certainty about its potential impact.
David Yeandle, EEF head of employment policy, said: "In these difficult economic times, it is even more important for manufacturers to have greater certainty about future increases in the NMW and the potential direct and indirect impact on their business.
"Increases in line with basic rates of pay across the economy will help to achieve this objective and ensure that future increases in the NMW reflect the economic circumstances of the time."
There will also be an increase in the limit on a week's pay for calculating statutory redundancy payments, and tribunal awards that use a week's pay as the basis for calculation. These will rise from £350 to £380.
Finally, bars, restaurants and hotels will no longer be able to count service charges, tips, gratuities and cover charges paid to a worker through the employer's payroll as part of the NMW.
Lord Mandelson said: “When I leave a tip I don’t expect it to be used to make up the minimum wage. I want it to go to the person who has served me as a thank you for their service. This is a basic issue of fairness. Tips are meant as a bonus – not a tool to boost pay to the basic minimum.
“That’s why the Government has closed this legal loophole. Thanks to the help and support of Unite, the British Hospitality Association, the CBI, Consumer Focus and other stakeholders we are also able to launch a new code of best practice today.
“This will promote good tipping practices amongst businesses and ensure that consumers are clear about what happens to their money,” he added.
These changes will come into effect from 1 October 2009.
© Crimson Business Ltd. 2009