The Government is to remove the payment of tips and some unsocial hours premiums from the calculation of the national minimum wage. This will mean significant pay increases for many young, non-unionised workers in sectors such as tourism and retailing.
The Minister of State for Labour Affairs, Mr Tom Kitt, confirmed yesterday that the Minimum Wage Bill is to be amended. He proposes deleting four "reckonable components" from the Bill: long-service increments, discretionary tips, tips included as a service charge on a menu and premiums for bank holiday and weekend working.
The changes are partly in response to forceful lobbying by unions such as Mandate. However, the IBEC human resources director, Mr Turlough O'Sullivan, said Mr Kitt was quite wrong to indicate the excluding of tips from reckonable pay. Tips were a substantial element of pay for many private sector companies. Both the Minimum Wage Commission and the Interdepartmental Group on low pay agreed with the IBEC position.
Mr O'Sullivan calls on the Government to adhere strictly to the existing Bill. "A failure to do so will impact most negatively on small businesses, result in job losses and in cost increases to consumers," he says.
He expresses concern at calls for shift premiums to be excluded from reckonable pay and warns that the IBEC "is not prepared to contemplate any further watering down of the Bill". With less than three weeks to go before the Bill becomes law, he says Mr Kitt is creating unnecessary confusion.
The present Bill allows a wide number of items, including shift premiums, to be included in the calculation of the minimum wage of £4.40p an hour.
Defending the decision to allow shift premiums to be included in the calculations, Mr Kitt says that the Government has to take account of the interests of all the parties concerned and a balance has to be struck.
He accepts there has been considerable unease among Fianna Fail backbenchers about the inclusion of tips and weekend premiums in reckonable earnings.
Earlier yesterday Mandate, the union representing bar and retail staff, said that it had been given a "clear understanding and expectation" that changes would be made in the legislation. This followed discussions with the tanaiste and Minister for Enterprise, Trade and Employment, Ms Harney.
Mandate's deputy general secretary, Mr John Douglas, said the inclusion of tips and premiums for working weekends and bank holidays as "reckonable components" to the minimum wage represented a serious structural defect in the legislation.