A legal loophole means that waiting staffs’ pay can be topped up to the minimum wage using non-cash tips.

The UK Government has given its strongest signal yet that it is to consider the legal practice of restaurants and hotels using waiting staffs’ tips to top their pay up to the National Minimum Wage (NMW).

UK Secretary of State for Business Enterprise and Regulatory Reform, John Hutton, said the government is “seriously looking into” the issue during last week’s questioning in the House of Commons.

Under current rules, non-cash tips – those added on to a card transaction – can be paid to staff through a company’s payroll and used to make up their wage. Cash tips cannot be used however.

Hutton’s comments were made in response to Labour MP, Jim Sheridan, who stated that through the practice “the consumer in effect subsidises unscrupulous employers.” Sheridan called for the government to follow the example of America which has already begun the process of challenging the legislation.

The current system has been highly criticised by employment union, Unite, which launched a campaign calling for transparency over tips during summer 2007.

According to the body, the current system is particularly unfair as it means staff end up taking a pay cut when they are on holiday or off sick.

By Natasha Piscitelli