The government plans to introduce legislation to ban hospitality bosses from withholding staff tips.
Employers in restaurants, cafés and pubs may soon be breaking the law by withholding tips from workers, many of whom are on minimum wage and rely on them to top up their income.
Employees will have the power to take bosses to an employment tribunal, where they could be forced to compensate workers or face a fine.
Labour Markets Minister Paul Scully said the plans were to ensure fairness, saying the enforcement would “ensure tips will go to those who deserve it”.
The plans are expected to be introduced within the next year, with the Department for Business saying that the new legislation would help around two million people working in the hospitality industry, a sector that has been hit disproportionately by the impact of the pandemic.
The nature of tipping is a complicated affair, as issues arise when tips are made by card transaction, which remains the most common payment method, particularly post-pandemic.
Paying by card incurs a small fee, around 1.5 per cent, but some chain restaurants deduct between 8 and 10 per cent from tips, including Prezzo, Ask Italian, and Pizza Express, all of whom reportedly levied an admin charge on tips paid by card.
Not only this, but the chains Cote Brasserie and Bills were accused of keeping the entirety of the service charge, failing to distribute staff tips when customers tipped by card, and whilst all of these organisations denied any wrongdoing, the backlash from the public and unions was immense.
Mr Scully commented:
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.
Current legislation means that cash tips are legally the property of staff, but businesses who receive tips by card have the choice of whether to keep it or pass it on to workers, causing growing concern amongst workers as research suggests that most tips are now paid by card in the UK.
The proposed legislation also includes a code of practice, which will set out how tips should be distributed fairly, and workers will get the right to request information on their boss’s tipping record.
Interim director of the Living Wage Foundation, 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.