The
Chairman: Order. We are getting into the issue of tipping
generally. It would be useful if the hon. Gentleman could bring the
debate back to its relationship with the national minimum
wage.
Mr.
Swire: Indeed. I shall therefore call them
gratuities.
John
Hemming: Does the hon. Gentleman agree that bringing in
such a change would make a distinction between the service charge,
which is really a way of hiding part of the price of the food, and a
gratuity, which is a bonus for extra
work?
Mr.
Swire: Absolutely right. A gratuity is a gratuity. As I
said, it should reward service that is way and above that which one
would normally expect to
receive.
Mr.
Binley: I am getting a little concerned about the
anti-business attitude in all this, and I want to defend the people who
act properly with their staff. Many of those who levy a service charge,
whether or not my hon. Friend agrees with that, act properly towards
their staff and ensure that they receive it. There is a difference
between a service charge, which embraces the whole of the operation,
and a gratuity to a given waiter or waitress. We have to be careful
that we are not seen as being seen as
anti-business.
Mr.
Swire: I do not agree with my hon. Friend. I have never
understood why one needs to pay any kind of charge to sit at a table in
a restaurant when one is going to pay for one’s food. A gratuity
is for service, and it should go to the person who is serving. That is
why I increasingly pay in cash at the end of my meal to ensure that it
goes to the waiter serving me and is not used by the proprietor to get
that person up to the level of the minimum
wage.
Mr.
Crabb: Does my hon. Friend agree that if people go into
restaurants feeling compelled to tip merely to ensure that whoever
serves them, whether they perform well or badly, receives a legal wage
at the end of the
week, that dilutes the potency of a well run system of gratuities? At
the end of each night or each week, an employer should have an idea of
which staff are receiving large gratuities or tips and which are not.
That sends a good economic signal to him about how well his staff and
his business overall are doing, and it is therefore
pro-business.
Mr.
Swire: I agree. I do not believe that any well run
business—I have many in my constituency and there are many up
and down the country—should have to resort to any underhand way
of paying their staff through the gratuities left by their customers.
That is not anti-business—it is pro-employee and pro-well run
businesses.
John
Hemming: I therefore assume that the hon. Gentleman would
agree that suggesting to businesses that they make it clear what the
price list on the menu means is not anti-business but good for business
because it provides
clarity.
Mr.
Swire: I agree. We are very dependent on tourists in the
south-west—we have 15 million of them. No doubt many more would
come if the trade unions did not ban them from trade union homes in the
south-west, but we have to overcome that. Of course we want tourists,
not all of whom are English or speak English as their first language.
They might come to London, or wherever, and not understand about
service charges and whether they have to tip. It is a complete mess. In
no sense is this proposal anti-business—it is pro-business and
good for well run businesses. Gratuities should not be used as a
supplement in order to pay the minimum
wage.
2.45
pm
Mr.
McFadden: The new clauses cover an issue that we all care
about and which has come into increasing prominence over the last
couple of years. The minimum wage, which we have discussed during
consideration of the Bill, has evolved over time. For example, the
situation for 16 and 17-year-olds was changed a few years ago. We have
discussed changes with regard to voluntary workers and expenses, and
the law has changed with regard to work experience and so
on. This
is one such change, and it is something that I have wanted do since I
became employment relations Minister. In July, I was pleased to
announce that the Government would change the law to ensure that tips
could no longer count to make up the minimum wage. That is profoundly
within the instincts of the British people, and I was glad to make that
announcement. When
we leave a tip in a restaurant, however it is divided among the
staff—I might come on to that—we expect that it will be
additional to the minimum wage and will go to the staff who served us,
on top of their pay. It should not be used to make up the minimum
wage. The
hon. Member for Preseli Pembrokeshire said that some businesses operate
a system in which they guarantee the minimum wage, although some of it
will be made up from tips. At the moment, that is not illegal if the
tips or gratuities are processed through the payroll. Things partly
depend on that. The change would ensure that all tips were additional
to pay. We have announced that, and we believe it is the right thing to
do.
Under the law,
all workers are entitled to the minimum wage. The measure will deal
with the situation raised by the hon. Gentleman so that the practice of
using tips to make up the minimum wage will no longer be possible. That
is why we announced the change several months ago.
There is a
question about what happens to tips. It is more difficult to legislate
on that, but we would all like to achieve transparency. In the end, the
money is ours as customers—as the hon. Gentleman said, we can
choose to leave or not leave a tip, or to leave a smaller one should we
wish. We must work with the hospitality industry to promote
transparency over what happens to tips. That is equally as important as
changing the law to ensure that tips are additional to the minimum
wage.
Mr.
Swire: I risk your wrath, Mr. Caton, but I
agree with what the Minister says. I am sure that he and all members of
the Committee can give examples of when, after an indifferent meal,
they did not seek to reward that indifference, although they wanted to
reward the waiter who provided first-class
service.
Mr.
McFadden: That is a fair point. For the purposes of the
Government and the law, the critical point is that in future tips
should be in addition to the minimum wage. As customers, we expect that
to happen with our tips. I have not carried out a scientific poll, but
I suspect that most customers would not like to think that their tips
were making up the minimum wage.
John
Hemming: How is this going to be implemented in
law?
Mr.
McFadden: The hon. Gentleman is anticipating me. I have
explained how the regulations work at the moment: a service charge,
tip, gratuity or cover charge that is paid to the worker through the
payroll may, legally, count towards payment or part-payment of the
minimum wage. We are seeking to address that
issue. At
the end of July, we announced our intentions, and I am pleased to tell
the Committee that my Department is preparing a consultation document,
which we shall publish in a matter of weeks. We shall consult the
hospitality industry on precise implementation. We have heard various
comments today about service charges, gratuities, tips and so
on—it is true that there are all those different practices. When
making such a change, it is right to consult the
industry. I
also pay tribute to the people who campaigned for the change. The
campaign has increased substantially over the past couple of years. We
have heard a lot of talk about trade unions in our deliberations. I do
not want to go over all that again, but a number of unions campaigned
on the issue and, in doing so, were campaigning for something very much
in line with public instincts. Our intention is to consult on exactly
how to do this, but let me leave no doubt about the Government’s
intentions to do it, which will be made clear in a document in the next
few
weeks. As
for the amendments, we do not need to make the change through primary
legislation. We can do it through the minimum wage regulations, which
are debated in the House every year. We have a route forward, having
consulted with the industry. There is substantial unity
in Committee—across all three parties—that the issue is
one that we want to address. As I said, the Government have announced a
firm intention to do so. There is no need to do anything through the
Bill or primary legislation. Fairness on tips unites us. On that basis,
I hope we can move
forward. John
Hemming: Obviously the issue can be dealt with through
secondary legislation. Therefore, there is an argument for new clause 1
to be withdrawn, but new clause 7 would create a duty on the Government
to act as they intend, which, perhaps, would give legislative cover.
That would not be subject to judicial review, which secondary
legislation can be. On new clause 1, however, I beg to ask leave to
withdraw the
motion. Motion
and clause, by leave,
withdrawn.
New
Clause
2Enforcement
of unpaid Employment Tribunal
awards ‘(1) The Secretary of
State shall by order make regulations to enforce the recovery, on
behalf of the claimant, of any Employment Tribunal monetary award not
fully paid by the respondent within forty-two days of the date on which
judgment was sent to the parties, and for the recovery of all
associated enforcement costs from the
respondent. (2) Regulations
made under subsection (1)
shall— (a) identify
organisations responsible for the recovery of awards under subsection
(1), (b) provide powers
enabling organisations identified under paragraph (a) to recover awards
and associated costs as set out in subsection
(1), (c) provide for the
regulation of organisations operating under this
section. (3) Regulations under
subsection (1) shall be made by statutory
instrument. (4) No regulations
may be made under subsection (1) unless a draft of the instrument
containing the regulations has been laid before and approved by a
resolution of, each House of Parliament.’.—[John
Hemming.] Brought
up, and read the First
time.
John
Hemming: I beg to move, That the clause be read a Second
time. Unless
we get a more substantive response from the Government, the new clause
is a key issue that will require a Division of the
Committee. In
essence, the new clause looks at what would happen if someone did not
pay the employment tribunal award. As it stands, there would then be a
civil enforcement process. We will come to the fact that equality of
arms is the key issue. A lot of the people who are trying to get money
that has not been paid to them are in a challenging position, having to
go to a civil court and go through that process. The new clause would
put a duty on the Government to produce secondary legislation. We are
not trying to specify in minute detail how that should be done—I
would not be surprised if this proposal had been drafted by Citizens
Advice, but I am not 100 per cent. certain, not having been involved at
that
stage. People
should recognise that there is a real problem here. The Government need
to act. This is the right vehicle to create regulations enabling the
enforcement process to be handled, so I would like to press new clause
2 to a vote, unless the Government pull some legislative rabbit out of
the hat.
Mr.
Djanogly: I put my name to the new clause on a probing
basis, because important questions raised in the other place have not
yet been answered. The Government say that they recognise that there is
a need to address the recovery of awards, but they do not believe that
direct enforcement is the way to deal with such claims. Will the
Minister tell us what form enforcement should take
instead? The
new clause deals with a problem that is often faced by those at the
poorer end of the employment spectrum. It was originally tabled in the
other place by Baroness Turner at the request of Citizens Advice, with
the aim of dealing with the problem of non-payment of employment
tribunal awards by rogue
employers. The
current system is long and complex, and sometimes prohibitively
expensive for those who have not been paid their award. There are, on
average, some 15,000 employment tribunal awards made in favour of
claimants each year, but Citizens Advice estimates that more than one
in 10 does not receive their award. Citizens advice bureaux dealt with
more than 1,000 cases last year alone, and Citizens Advice research
also highlights the fact that nearly half those unpaid awards were for
less than £2,000 and almost a quarter were for less than
£1,000. For
those vulnerable workers affected, navigating the county court or High
Court enforcement process can be a daunting challenge that involves a
lot of time, stress and cost relative to the value of the award.
Citizens Advice notes that many of those affected simply do not take
their claims forward, that the impact on them can be devastating and
that the total loss involved may be as much as £7 million per
year. Rogue employers’ knowledge of the complexity of
enforcement provisions means that they could see it as a commercial
decision to avoid paying out, because, on balance, they might save more
than they would be forced to pay out in the longer
term. The
Government have said that they commissioned their own inquiry on this
area, on the back of Citizens Advice. Will the Minister tell us what
format the inquiry has taken and what results it has produced to date,
bearing it in mind that the inquiry has been running at least from
May? There
is a wrong here that needs to be recognised. I am interested to hear
the Minister’s reaction to the question whether the new clause
is the right way to go about
that.
Michael
Jabez Foster: I would like to know what the problem is. At
present, this is a straightforward issue of the judgment—the
award—being registered in the county court and then enforced.
There are problems with county court enforcements: often the employer
does not have the money; it is a matter of the resources not being
there. I cannot see how a new system—a new bureaucracy of
enforcement—would
help. I
want to discover how this new organisation would operate under the new
clause. How would it differ from the current, relatively simple process
of attaching an affidavit to the award and registering it in the county
court? That is all that happens at the moment. Then there is the
enforcement problem to consider. Is it being suggested that the rules
under the new clause should be enforced in respect of criminal
proceedings, such as an award in a magistrates court? What is the logic
behind
the new clause that would make its new methods of enforcement different
from those now available in the county
court? | 
