Recruiters have welcomed new legislation which comes into force today making it illegal for businesses to use tips to bring staff pay up to minimum wage levels. 

The national minimum wage also increased from £5.73 to £5.80 today.

Gary King, director at Collins King & Associates, told Recruiter that the move would improve standards in the industry and among candidates: “It is a good move. People will be paid on good service. It works well in the US.”

Rachel Jackson, senior consultant at Mise en Place, adds : “I can see it from both sides. With the change in the economic climate, it is tougher to cover the escalating costs. The guests like to tip as a reward for service rather than a charge added to their bill. It is a real motivating tool for staff.”

Jane Brumby, director at Apple Appointments, told Recruiter candidates need to be paid a fair wage: “It won’t affect us in any way, shape or form. We pay a higher hourly rate anyway. Tips are a bonus. I don’t think anyone should have to rely on tips to make up an hourly rate.”

Business secretary Lord Mandelson, who announced the new rules yesterday, 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.

“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.”