Government to Ban UK Restaurants From Keeping Staff Tips
The Government has confirmed that new legislation will be introduced to ensure that all tips go to workers after research revealed that many businesses that add a discretionary service charge onto customer’s bills do not pass them onto staff.
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.
What Will the New Legislation Stipulate?
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:
- Requirements for employers in all sectors not to make any deductions from tips received by their staff, including admin charges, other than those required by tax law.
- Requirements for employers to distribute tips in a way that is fair and transparent - this should be supported by documentation including a written policy on tips and record of how tips have been dealt with.
- Time limits as to when tips must be dealt with by employers - this is expected to be no later than the end of the month following the month in which it was paid by the customer.
- A Statutory Code of Practice setting out how tips should be distributed to ensure fairness and transparency - employers should have regard to this.
- New rights for workers to make a request for information relating to an employer’s tipping record - such requests should be responded to within four weeks.
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.