On the 24th September the government published a response on its consultation on how to ensure the protection of tips received by workers and employees in the hospitality, leisure and service sectors.
Currently, there are no rules for what proportion of a tip earned by a worker should actually be paid to the worker. Instead many of the 190,000 businesses across hospitality sectors retain some or all of the tips received by workers instead of passing them on. The position is also made worse for workers due to the increasing cashless society, as now up to 80% of tipping by customers in the UK is done through card payments. This makes it harder for employees to monitor their tips compared to a more traditional cash-in-hand transaction.
The new legislation, aimed to protect the tips and enhance the rights of workers will include:
- A requirement for employers to pass on all tips intended for workers without deducting any money from the tips (other than those required by tax law). Employers withholding tips from workers will now be illegal.
- The introduction of a Statutory Code of Practice which will provide guidance on the distribution of tips so that the process remains fair and transparent.
- A requirement for employers to have a written policy regarding tips as well as a record of how tips are handled and dealt with within the business.
- Any tips must be dealt with no later than the end of the month following the month in which it was paid by the customer.
- The right for workers to request information from an employers’ tipping record, which will enable workers to bring forward a credible claim to an Employment Tribunal if the worker feels the employer is not following the Statutory Code of Practice.
- Employers will have some flexibility around how to produce and provide the tipping record for employees, however they must respond to a request within four weeks of the request being made.
The measures will be included in an Employment Bill, which will be brought forward when Parliamentary time allows.
After the impact of the COVID-19 pandemic on the hospitality, leisure and service sectors, it is anticipated that these changes will provide a financial boost to workers within these industries, many of whom earn the national minimum wage or national living wage and therefore rely on tips to add to their income.
Thank you to Izzy James for her help in drafting this blog post.