Instead, they choose to keep all or part of the discretionary payments received.
The practice of businesses withholding tips paid by card from staff is not currently prohibited under UK law, and there is no legal requirement for businesses to allocate a specific proportion of the service charge or non-cash tip income to staff.
However, the Government has indicated that, in recognition of the reliance placed on tipping by many staff in the hospitality sector in order to top up their income, legislation will be introduced prevent employers making any deductions from tips received by their staff other than those required by tax law. Under the legislation, it will therefore become illegal for employers to withhold tips from their staff.
The law will be put before parliament as part of an upcoming Employment Bill, which will 'provide further protections around workers’ rights', but there is no firm timetable at present. So, it is not yet known when the new legislation will come into force. However, some of the measures we are expecting to see within the legislation include the following:
Employers who fail to comply with the legislation could face tribunal claims as there will be a right for staff to bring claims for breach of the legislation in the employment tribunal.
Access the government response here.