BHA To Discuss Proposed Changes in Service Charge Law
The British Hospitality Association will discuss the proposal by the Department of Business, Enterprise and Regulatory Reform to prevent hospitality businesses using the service charge to contribute to the minimum wage.
Because of the tax and National Insurance implications, staff on the minimum wage could, in fact, be many pounds a week worse off. The change would also have a significant impact on business costs.
'Allowing the discretionary service charge to be used in this way was specifically allowed in the legislation by the Labour government that introduced the National Minimum Wage in 1999,' says BHA Chief Executive, Bob Cotton.
'I have yet to see proposals on this subject that have been thoroughly thought through.' At present, they have a potentially highly unfavourable impact on pay for staff. The only person to gain will be the tax man.
'If the government wants to make these changes, they should be considered over a longer period than is being proposed so that adjustments can be made to wages and selling prices,' added Mr Cotton.
Because of the tax and National Insurance implications, staff on the minimum wage could, in fact, be many pounds a week worse off. The change would also have a significant impact on business costs.
'Allowing the discretionary service charge to be used in this way was specifically allowed in the legislation by the Labour government that introduced the National Minimum Wage in 1999,' says BHA Chief Executive, Bob Cotton.
'I have yet to see proposals on this subject that have been thoroughly thought through.' At present, they have a potentially highly unfavourable impact on pay for staff. The only person to gain will be the tax man.
'If the government wants to make these changes, they should be considered over a longer period than is being proposed so that adjustments can be made to wages and selling prices,' added Mr Cotton.

