The Government’s long talked about plans to tackle the tipping practices in the hospitality industry came one step closer to fruition when a press release was published outlining their plans.
The plan, which will provide new enhanced rights for up to 2 million hospitality workers, sets out how the Government will ensure that all tips and discretionary service charges will go directly to the workers.
The Government recognises that many hospitality workers are earning the National Minimum Wage (NMW) or National Living Wage (NLW) and therefore rely on their customers’ tips to top up their income. Employers have been prohibited from using tips to count towards the NMW since 2009.
Due to the Covid-19 pandemic the move towards a cashless society has accelerated and statistically up to 80% of tips are paid by card. Under the current rules, employers have the choice of whether to pass the tips paid via a card payment onto the workers. Often the money is redirected to meet other employer costs, such as heating and lighting etc.
Under new legislation, it will be illegal for employers to withhold tips from workers.
Fair and transparent
The new legislation, which will be in the form of a Statutory Code of Practice will set out how the tips should be distributed fairly and transparently. This will form part of a range of Government measures which will protect and enhance workers’ rights.
Workers will also have the right to make a request for information on an employer’s tipping record if they want to make a claim to an employment tribunal. If an Employment Tribunal rules in favour of the worker, then the employer will be forced to compensate the worker and may also be fined.
Labour Markets Minister Paul Scully said:
“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. 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.”