§ Mr. Rooker
asked the Secretary of State for Social Services if he is satisfied that national insurance contributions by companies in the hotel industry are based on earnings of employees and not basic wage rates; and if he will make a statement.
§ Mr. Prentice
The answer to the first part of the question is "Yes".
Gratuities received directly or through a "tronc" system operated independently of the employer are not regarded as earnings of the employment for the purpose of liability for class 1 contributions. I understand that hotel industry employers in certain localities make a standard deduction from the basic wage for certain employees in respect of gratuities which, to the extent they are not received by the employee, are then made up by the employer. Thus, using the basic wage rate 503W as a basis for class 1 liability would mean imposing such liability in respect of gratuities received directly or through a tronc. I have no such proposal under consideration at present. It would mean, for example, that other groups of workers might then press for a similar facility for basing liability on amounts other than actual earnings; if granted, this would inevitably lead to greater and more costly complexity in the administration of national insurance.