Hospitality staff set to keep all their tips under rule change

Image source, Getty Images

Restaurant, café and pub bosses are set to be banned from keeping tips left for staff by customers in Britain.

The government plans to make it illegal for hospitality firms to withhold tips from workers, who often rely on them to top up their income.

Labour Markets Minister Paul Scully said the plans would "ensure tips will go to those who worked for it".

If an employer breaks the new rules they can be taken to an employment tribunal.

In that instance, bosses may be forced to compensate workers or face fines.

In a statement, the Department for Business said that the new legislation would help about two million people working in the hospitality industry.

It is expected to come into force within the next year.

But it comes some time after the practice was reported to have taken place at High Street chains such as Pizza Express, Cote Brasserie and Bill's.

In 2015, the restaurants were accused of keeping tips or charging 10% "administrative costs" on processing the service charge payments if they were made by debit or credit card.

Although they denied any wrongdoing, the reports drew a huge backlash from unions and the public.

Conservative MP Paul Scully said on Tuesday: "Unfortunately, some companies choose to withhold cash from hardworking staff who have been tipped by customers as a reward for good service.

"Our plans will make this illegal and ensure tips will go to those who worked for it".

He added that the move would also reassure customers that their money is going to "those who deserve it".

Ministers also pointed towards research that suggests most tips are now paid by card in the UK, rather than in cash.

Currently, businesses who receive tips by card have the choice of whether to keep it or pass it on to workers. Cash tips, on the other hand, are legally the property of staff.

Image source, Getty Images
Image caption,
Fewer tips are being paid in cash due to the rise in contactless payments

As well as requiring all employers to pass on all tips, service charges and gratuities in full without any deductions, the new legislation will introduce a code of practice, which will set out exactly how tips should be distributed fairly.

Workers will also get the right to request information on their boss's tipping record, in case they want to bring a claim to an employment tribunal.

While the move was welcomed by the Living Wage Foundation, it said that the focus should be on improving wages in lower-paid sectors instead.

Its interim director, Graham Griffiths, said: "If this work is to be truly valued we need to see more people lifted onto a real Living Wage.

"To build a stronger and more dynamic economy, our focus should be on increasing the number of businesses doing the right thing and committing to pay a Living Wage".

Kate Nicholls, UKHospitality chief executive, added the new rules would strengthen the sector's ability to create jobs.

But she pointed out: "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."

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