New laws to be introduced to make sure hospitality workers can keep their tips

Are you legally entitled to tips?

It has long been a point of controversy that tips left by customers do not necessarily reach hospitality staff in full. 80% of UK tips are now left by card, and businesses can currently choose whether or not to pass these on to staff.

However, the Government has now confirmed that a new law will be introduced, requiring employers to ensure all tips are passed on to workers. This will benefit around 2 million people working in businesses across the hospitality, leisure and service sectors.

Here is an overview of what the changes will include: 

  • It will be illegal for employers to withhold tips from their workers. Employers in all sectors will also be required not to make any deductions (including administrative charges) from tips received for their staff, other than those required by tax law.
  • The law will be supported by a Statutory Code of Practice on Tipping, which will be developed in partnership with workers and employers. This will be underpinned by principles of fairness and transparency. 
  • Employers will need to have written policies on tips and ensure that tips are distributed in a fair and transparent manner. While employers will be able to distribute workers’ tips via a common fund, they will have to ensure payment to workers no later than the end of the month following the month in which the tips were paid by the customer.
  • Records of how tips have been dealt with will have to be kept.
  • Workers will have the right to request information relating to an employer’s tipping record. While employers will have some flexibility around designing and communicating a tipping record, a response must be provided within four weeks of the request. The Government has indicated that this is important for workers to obtain the information necessary to make a credible claim to an Employment Tribunal, so employers will need to create a clear and informative system for providing details.

When is the new law on tipping going to be implemented?

While there is not yet a date for the new law to be implemented, it is likely to be introduced soon, and businesses should consider now what changes they will need to make to be compliant, especially where tips are processed digitally. Failure to comply with the new measures could lead to a claim being brought against the employer in an Employment Tribunal, where employers can be forced to compensate workers, often in addition to fines.

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