Restaurants will be banned from keeping any staff tips under new hospitality laws

Restaurants and their owners will be banned from keeping staff tips under new laws drawn up by the government, it has been reported.

The business secretary Kwasi Kwarteng is expected to announce plans that will stop businesses keeping any or all of the service charge when customers pay by card.

The move comes after complaints of low pay and poor morale among hospitality workers, with both issues thought to be contributing to staff shortages across the industry.

Since lockdown, pubs and restaurants have warned ministers of a chronic shortage of hospitality professionals. Many believe Brexit, which has led to many EU nationals to leave the UK, has also had a big impact.

The use of cash has fallen dramatically due to the pandemic, which has made it much harder for waiters to keep all of their tips.

The current laws state pub and restaurant owners are banned from keeping any cash tips left for waiting staff, but the distribution of service charges paid for via bank cards may be different.

And this is without considering the complications brought about by Tronc.

The new rules, however, first reported by the Mail, will allow the 1.7 million UK workers in pubs, restaurants, and cafes to be entitled to 100 per cent of their tips, however they are paid.

A Whitehall source allegedly said: “Workers going above and beyond for their customers can now rest assured that their hard-earned tips will be going directly in their pockets and nobody else’s. We’re putting an end to dodgy tipping practices and making sure that hard work pays off. We are also levelling the playing field for businesses, ensuring that good firms which give all the tips to workers are not undercut by the firms which keep the money.”

CODE contacted the Department for Business, Energy & Industrial Strategy for comment and a spokesperson told us: “We are doing everything we can to back hospitality staff as the sector recovers. Workers should get the tips they deserve, and customers should have reassurance that their money is rewarding staff for their hard work and good service. Further announcements on this key issue will be made shortly.”

Last year, CODE reported restaurants – including Oklava and Leroy – were starting to scrap service charge altogether, instead raising prices to afford staff a better flat rate of pay, without relying on tips.

Selin Kiazim of Oklava said: “We will no longer be adding the customary optional 12.5% service charge onto our bills, instead, it will be incorporated into our menu prices. Without the charge being obligatory, we would not be able to pay our skilled staff the wage they deserve.”

Other restaurants to do this include Mana in Manchester and Hackney Coterie in east London.

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