On 24 September 2021 the Government announced that there would be changes to the current laws on staff tips based on its findings from the Consultation on Tipping, Gratuities, Cover and Service Charges in 2016 (All tips to go to staff under government plans to enhance rights of 2 million workers - GOV.UK (www.gov.uk). When the legislation comes into force businesses will no longer be able to take any part of the tips (or service charges) given to staff. A change in the rules has become more urgent after the pandemic spurred a switch to cashless payment with 80% of all UK tipping now happening by card, making it easier for businesses to keep funds.
At present, legislation prohibits restaurants from holding onto cash tips, but when a tip is given over card, it is at the restaurant's discretion as to how and where that money is spent. The government has a Code of Best Practice (A Code of Best Practice on Service Charges, Tips, Gratuities and Cover Charges (publishing.service.gov.uk)) on tips that indicate how employers should handle them, however it is voluntary and employers do not have to follow it.
The new legislation will be included in the forthcoming Employment Bill and the Government expects the rules to commence one year after the Bill has passed. It will be illegal for employers to withhold tips from workers and the Government will legislate to prevent employers making any deductions from tips received by their staff, other than those required by tax law.
The legislation is expected to include the following:-
It has been confirmed that breach of these new obligations will be enforced in employment tribunals (ET). It is therefore vital that employers keep abreast of the changes in the law to prevent any ET claims arising from employees not getting tips. If you would like any advice on this please contact our Employment Team.