New laws for staff tips in pubs and restaurants confirmed by government

The government will make it illegal for employers to withhold tips from workers under new hospitality laws.

All tips, both paid in cash and by card, including discretionary service charges, will go to staff under plans set out by the Department for Business, Energy and Industrial Strategy (BEIS).

Numerous pubs and restaurants already hand over gratuities to their team members, though there have long been reports of some bosses taking a cut.

Currently, all money given to waiters and waitresses in cash must be kept by staff, but the discretionary service charge added to bills isn’t afforded the same protection.

While a number of restaurants have scrapped the service charge altogether in recent years – Mana, Leroy, Oklava, and others – it remains common, so for the government to act might well be good news to hospitality professionals.

The decision might also be a distraction technique by ministers eager to avoid talking about the most profound issues facing the sector, such as the shortage of skilled staff, delivery problems, and rising food prices.

Either way, a government overhaul of tipping practices is coming. BEIS didn’t set out a clear timeframe. Instead, the department’s announcement talked about how hospitality workers rely on tips to supplement low incomes.

“The Government will make it illegal for employers to withhold tips from workers – set to help around two million people working in one of the 190,000 businesses across the hospitality, leisure and services sectors, where tipping is commonplace and can make up a large part of their income,” said a statement.

“This will ensure customers know tips are going in full to workers and not businesses, ensuring workers receive a fair day’s pay for a fair day’s work.”

The labour markets minister Paul Scully added: “Unfortunately, some companies choose to withhold cash from hardworking staff who have been tipped by customers as a reward for good service.

“Our plans will make this illegal and ensure tips will go to those who worked for it. This will provide a boost to workers in pubs, cafes and restaurants across the country, while reassuring customers their money is going to those who deserve it.”

Today’s plans will create consistency for those being tipped by cash or card, while ensuring that businesses who already pass on tips fairly aren’t penalised.

The legislation will include:

• A requirement for all employers to pass on tips to workers without any deductions

• A Statutory Code of Practice will set out how tips should be distributed to ensure fairness and transparency

• New rights for workers to make a request for information relating to an employer’s tipping record, enabling them to bring forward a credible claim to an employment tribunal

• Under the changes, if an employer breaks the rules they can be taken to an Employment Tribunal, where employees can be forced to compensate workers, often in addition to fines

Tipping legislation will form part of a package of measures which will provide further protections around workers’ rights, and follows the government’s first Hospitality Strategy.

Commenting on plans for new tipping legislation Kate Nicholls, CEO of UKHospitality said:

“UKHospitality supports the right of employees to receive the deserved tips that they work incredibly hard for. The hospitality sector as it begins to rebuild after 18 months of restrictions and enforced enclosure is already creating new jobs and driving the jobs recovery. Ensuring employees receive the tips they earn will further strengthen the sector’s ability to create jobs and support the wider economic recovery.”

“For hospitality businesses, though, customers tipping with a card incurs bank charges for the business, and many also employ external partners to ensure tips are fairly distributed among staff. With restaurants, pubs and other venues struggling to get back on their feet, facing mounting costs and accrued debts, we urge the Government to continue to work closely with the sector as it introduces this legislation to ensure this works for businesses and employees.”

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