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Hospitality staff to get the thank you they have earned

Published 27 September 2021

A new law will mean staff working in the hospitality sector who are recognised for their good work will not be left out of pocket.

Pubs, restaurants and cafes will in future be banned from keeping tips left for staff under the new legislation that is set to be introduced.

As we move closer to becoming a cashless society, the use of card payments has made it much easier for unscrupulous employers to keep any gratuity intended for staff

The practice of leaving a cash gift on a table for waiting staff as a thank you for their excellent service, and it going straight into their pocket, is largely a thing of the past.

Businesses who receive tips by card currently have the choice of whether to keep it or pass it on to workers.

The introduction of the new law will give a welcome cash boost to low-paid waiting staff and hospitality workers, many of whom earn the National Minimum Wage or National Living Wage [1]

Previously some companies have withheld tips from staff, and the introduction of new legislation will  make it illegal for businesses to do so. [2]

The move is set to help around two million people working in one of the 190,000 businesses across the hospitality, leisure and services sectors, where tipping is common place and can make up a large part of their income.

Under the new law, employers who divert tips and service charges from restaurant workers can be fined and forced to compensate staff. However, any legal action will be reliant on workers bringing an employment tribunal case.

The statutory code of practice to be developed after further consultation with businesses, workers and other stakeholders will set out how tips should be distributed to ensure fairness and transparency.

The code of practice will also give workers the right to make a request for information relating to an employer’s tipping record, enabling them to bring an employment tribunal claim.

The introduction of a new law on tips follows widespread controversy and campaigning to outlaw a practice, which saw employers taking the money for themselves.

There were calls to boycott Pizza Express in 2015 after it was reported to have had an eight per cent admin charge levied on tips paid by card [3]

The company refuted the claim  and is reported to have later let waiting staff keep all their tips, ending its policy of deducting eight per cent from any paid by card for ‘administration costs’.

Restaurant chain Côte was also criticised at the time for a policy in which it was said to be taking service charges added to bills rather than giving them to waiting staff as tips [4]

It is reported the policy meant a 12.5 per cent service charge was automatically added to every bill but never led to workers’ take-home pay rising or falling in line with how busy or quiet their restaurant was.

Unite led a long-running campaign to change the law on tips. It welcomed the new legislation, which it said was long overdue [5]

The trade union said the delay in addressing the issue has unacceptably cost more than two million hospitality workers an estimated £10,000 each.

The new legislation will  include:

  • a requirement for all employers to pass on tips to workers without any deductions
  • a Statutory Code of Practice setting out how tips should be distributed to ensure fairness and transparency
  • new rights for workers to make a request for information relating to an employer’s tipping record, enabling them to bring forward a credible claim to an employment tribunal

Under the changes, if an employer breaks the rules they can be taken to an Employment Tribunal, where employers can be forced to compensate workers, often in addition to fines.


References

[1] Hospitality Cash Boost, https://www.gov.uk [internet] https://www.gov.uk/government/publications/the-national-minimum-wage-in-2021 [[cited 27.9.21]
[2] Laws on Withholding tips, https://www.gov.uk [internet] https://www.gov.uk/government/publications/the-national-minimum-wage-in-2021[cited 27.9.21]
[3] Report on Pizza Express, https://www.bbc.co.uk [internet] https://www.bbc.co.uk/news/magazine-34146032[cited 27.9.21]
[4] Service charges added to bills, https://www.standard.co.uk [internet] https://www.standard.co.uk/news/london/cote-bosses-back-down-over-tips-and-offer-staff-new-deal-a3092086.html [cited 27.9.21]
[5] Campaign to change the law on tips, https://unitelive.org [internet] https://unitelive.org/tips-justice-at-last/ [cited 27.9.21]

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