The government is introducing new rules for hospitality businesses to prevent them from withholding tips from workers.
In order to further protections around worker’s rights, new legislation is to be brought in next year to ensure that all monies collected as tips and service charges are distributed to employees in a fair and transparent manner.
Unfortunately, some companies choose to withold cash from hard working 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.Conservative MP Paul Scully
Kate Nicholls, UKHospitality chief executive, added the new rules would strengthen the sector’s ability to create jobs.
But she pointed out: “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… 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.”
Code of Practice 2009
As you will probably know, the last Code of Practice was published in 2009 which moved to ensure that service charges, tips, gratuities and cover charges are not used to make up minimum wages so that the pay they receive is national minimum wage with any tips due, received on top.
Best practice “Principles of Transparency” were introduced as follows:
- Businesses will clearly display on their premises prior to the point of purchase or choice their policy relating to mandatory and discretionary service charges, tips, gratuities and cover charges, and make this accessible.
- Businesses will have a process in place to deal with requests from customers about how and to whom all service charges, tips, gratuities and cover charges are distributed, and the level and purpose of deductions.
- Businesses should ensure that workers understand and are able to confidently explain the business’ policy on service charges, tips, gratuities and cover charges to customers, or know where to direct customers for further information, and without risk of detriment.
- All workers should be fully informed on the distribution and breakdown of service charges, tips, gratuities and cover charges and the level and purpose of any deductions. Businesses should seek to reach agreement with workers on any change of policy.
Further information on the Code of Practice 2009, including guidance on how to carry out Best Practice, can be found here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/453089/09-1327-national-minimum-wage-code-of-best-practice-tips.pdf
An updated Code of Practice will be released closer to when the new legislation is enacted, so we will provide more information about how to work
If you would like more information on Tipping within the hospitality industry, please complete the form below to let Elyse know that you would be interested in receiving a copy of her book “Tips about Tips for Pubs & Restaurants” when it is released on 1st December 2021. (There will be updates later in 2022 to account for the changes in legislation).