“Prepare for Tips-for-Wages Ban,” Urges IPP

Written by PayPerShop.com - Filed under: Press Releases on May 12th, 2009

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The Institute of Payroll Professionals (IPP) is advising companies in the hospitality and catering industry not to be caught short by new Government legislation, in which the practice of using tips to boost staff pay to National Minimum Wage levels will be prohibited.

From October of this year the sector will be banned from using tips to top up the pay of employees who earn less than the National Minimum Wage.

The government has confirmed the new law to help ensure that workers are receiving the required £5.73 per hour.

But the IPP says many organisations need to consider the implications the new legislation could have on their business and in particular on the business payroll process.

Lindsay Melvin, CEO of the IPP, says: “Whilst workers will benefit by receiving a base pay of the National Minimum Wage with any tips received on top, there could be significant implications for employers if they do not set up their payroll systems to deal with change from the outset.”

For many firms the impact of a change in legislation on administrative and accounting requirements will be significant, with amendments needing to be applied to payroll systems and employee contracts needing to be reworded.

Workers who don’t have a written contract containing specified information and who are employed for one month or more have a statutory right to receive a written statement of employment particulars, including ‘the scale or rate of remuneration or the method of calculating remuneration’.

In addition to this, employers will also need to amend their payroll systems to take into account NIC Contributions applied to employees’ new wage rates.

Although the required amendments will initially add to the administrative burden businesses already face, the cost of change is seen as a one-off and the IPP is advising businesses to get it right from the outset to avoid unnecessary HMRC penalties in the future.

Any business unsure of the payroll implications of the new legislation is encouraged to become a member of the IPP. As part of the membership, the IPP offers support and up to date information for all payroll related matters through a dedicated Advisory Service, which is managed by Officers who are at the heart of government policy.

For more information visit www.payrollprofession.org.

About IPP:
The IPP is a 24 year old membership organisation that wants to achieve Chartered status by 2010 (formerly known as The Institute of Payroll and Pensions Management until Sept 2006)

There are over 50,000 people who work in payroll and currently over 5,000 members of the IPP

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Written by PayPerShop.com - or reproduced on behalf of the company supplying the above information.

Filed under: Press Releases on May 12th, 2009