Hospitality staff to keep all tips under new government plans

The government has announced that it will introduce legislation to ensure that tips left for hospitality staff are paid to them in full (except for deductions required under tax law).

The new legislation is aimed to assist around two million people working in the industry to top up their income, many of whom are earning the National Minimum Wage or National Living Wage.

At present, cash tips are legally the property of workers who receive them. However, the more prevalent card tips, which make up 80% of all tipping in the UK due to the move towards a cashless society (especially since the covid-19 pandemic) do not automatically have to be given to the staff. Whilst many businesses will pass on these sums, the decision to do so is currently at the discretion of the business and the business could retain these funds, if it sees the need to do so.

Labour Markets Minister, Paul Scully, stated that the new measures will, “ensure tips will go to those who worked for it” as, “unfortunately, some companies choose to withhold cash from hardworking staff who have been tipped by customers as a reward for good service.”

Of the plans to make this illegal, he stated that it will provide, “a boost to workers, while reassuring customers their money is going to those who deserve it.”

The legislation will:

  • require all employers to pass tips onto workers without any deductions (such as administration charges) except for those deductions required by tax law;
  • result in a Statutory Code of Practice setting out how tips should be distributed to ensure fairness and transparency;
  • necessitate a written policy on tips and the retention of records of how tips have been dealt with;
  • allow tips to be provided by using a tronc but require that they are distributed no later than one month in arrears; and
  • introduce rights for workers to request information in relation to an employer’s tipping record, allowing them to bring forward a credible claim to an Employment Tribunal.

Under this new legislation, an employer faces action at an Employment Tribunal if they break the rules.

These measures are expected to be enforced within the next year and will form part of a package of measures which will provide greater protections for workers’ rights.

If you have any queries about the introduction of these new measures, please contact our employment team.

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