Millions of UK workers will be able to keep more of the money they earn thanks to new legislation that the government supported today (Friday, 15 July), which forbids businesses from keeping employees’ tips.
There are still far too many establishments that shamefully fail to pass on service charges from clients to their personnel, despite the fact that the majority of hospitality workers—many of whom are earning the National Minimum Wage—rely on gratuities to supplement their salary.
The Employment (Allocation of Tips) Bill, sponsored by Dean Russell MP and supported by the government, will make it illegal for companies to withhold well-earned service charges from their employees, ensuring that all tips go to staff.
More than 2 million UK workers in the hotel, leisure, and service industries—which depend most heavily on tips—stand to gain from this change in tipping customs, which will also relieve pressures brought on by rising living expenses and global inflation.
Jane Hunt, a minister for business:
It is just wrong for businesses to withhold tips from their hardworking staff at a time when people are feeling the pinch due to growing costs.
Customers can feel confidence that their money is going to people who deserve it because of today’s measures, which guarantee that staff receive a fair day’s pay for a fair day’s work whether they are serving customers or pulling pints.
I wish to give special recognition to Dean Russell, MP, and all the activists who worked to make the Tipping Bill a reality.
A new statutory Code of Practice will be created under the Bill to give firms and employees guidance on how tips should be given out.
Additionally, employees will have a new right to inquire about an employer’s history of tipping, giving them the opportunity to present a strong case before an employment tribunal.
Watford’s Conservative MP Dean Russell said:
I’m thrilled that the second reading of my Tips Bill in Parliament was successful.
It is wonderful that we are on track to obtaining a fair agreement for the millions of individuals employed in the hospitality industry nationwide.
The practice of some businesses keeping gratuities intended for their employees has always seemed inappropriate.
This new law will put an end to the practice, especially given the difficulties people are currently facing with regard to the expense of living.
I want to express my gratitude to all the companies and stakeholders who have contacted me to express their support.
The habit of businesses holding card tip money for themselves has become more prevalent as society moves toward a cashless economy, and today’s measures, assuming they become law, would outlaw that behaviour.
Kate Nicholls, CEO of UK Hospitality, said:
The amount of money that hospitality workers get paid each week is significantly and gratefully increased by tips and service fees.
We are therefore happy to note that this new legislation encourages firms to create a fair distribution strategy for employees, so that everyone gains.
This could reassure potential employees in the hospitality business at a time when the sector is looking to fill openings.
The revisions of today come after a number of government initiatives to aid individuals with the expense of living and assist those with lower incomes in keeping more of what they earn.
The government most famously hiked the National Living Wage earlier this year to £9.50 per hour, which is equivalent to an additional £1,000 per year for a full-time worker, along with a comprehensive campaign encouraging workers to verify their income.
The government has recently announced an expansion of the prohibition on exclusivity clauses, allowing the lowest-paid workers the opportunity to supplement their earnings and take on additional employment if they so want.
The reforms are being implemented at a time when payrolls are at an all-time high and there are more workers than ever.