Hospitality staff to keep tips under new laws

Hospitality staff to keep tips under new laws

Hospitality businesses that break the rules could face an employment tribunal 

With over 2 million workers in the hospitality industry, the government now plans to enforce new regulations to benefit workers in the sector. Restaurants, cafes and pub bosses are banned from keeping tips left by customers, ensuring staff members are given fair rights and improved wages. 

The new legislation, which is set to come into force next year, will make it illegal for hospitality businesses to withhold tips from their employees. Labour Markets Minister Paul Scully said the plans would “ensure tips will go to those who worked for it”. Unfortunately, some companies choose to withhold cash from hardworking staff who have been tipped by customers as a reward for good service, Mr Scully said. Our plans will make this illegal and ensure tips will go to those who worked for it. This will provide a boost to workers in pubs, cafes and restaurants across the country, while reassuring customers their money is going to those who deserve it. 

If an employer breaks the rules, they can be taken to an employment tribunal, be forced to compensate workers or face fines for failing to give employees tips. The legislation will require all employers to pass on tips to workers without any deductions, including a Statutory Code of Practice that will set out how tips should be distributed to ensure fairness and transparency. Workers will also be granted new rights to request information relating to an employer’s tipping record, enabling them to bring forward a credible claim to an employment tribunal. 

In 2015, several high street chains such as Pizza Express, Cote Brasserie and Bill’s were accused of keeping tips or charging “administrative costs” on processing the service charge payments if they were made by debit or credit card. The restaurant chains denied the reports but received huge backlash which sparked mass debate on the rights of workers. Currently, businesses who receive tips by card have the choice of whether to keep it or pass it on to workers. However, cash tips are legally the property of staff. The new legislation will help around 2 million workers retain their tips, and customers will know their money will go straight to the workers’ pocket. This will ensure customers know tips are going in full to workers and not businesses, ensuring workers receive a fair day’s pay for their work. Tipping legislation will build on a range of government measures to protect and enhance workers’ rights. In the past 18 months alone, the government has introduced parental bereavement leave, protected new parents on furlough, and given millions a pay rise through a higher minimum wage. 

Kate Nicholls, UKHospitality chief executive said the new rules would strengthen the sector’s ability to create jobs, adding: “For hospitality businesses, though, customers tipping with a card incurs bank charges for the business, and many also employ external partners to ensure tips are fairly distributed among staff. With restaurants, pubs and other venues struggling to get back on their feet… we urge the government to continue to work closely with the sector as it introduces this legislation to ensure this works for businesses and employees.”

Latifa Yedroudj
Latifa Yedroudj

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