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The Government has recently unveiled plans to overhaul tipping practices, which it claims will help around 2 million hospitality staff to top up their income. Even if you have already embraced the voluntary Code of Practice on service charges and tips, you will need to review your practices to ensure your business is compliant. Fortunately, there is no immediate rush as there is no implementation date.
As many staff in the hospitality sector are earning low basic wages, the Government proposes to:
- Make it illegal to withhold tips so that staff receive “a fair day’s pay for a fair day’s work”.
- Ensure that customers know that the staff are being rewarded for their good service.
- Publish a Statutory Code of Practice setting out how tips should be distributed to ensure fairness and transparency.
- Introduce a new right for workers to make a request for information relating to an employer’s tipping record. This could be used as evidence to bring an employment tribunal claim for compensation.
- Fine those business who do not comply.
The proposal recognises that we live in a cashless society with 80% of all UK tipping now happening by card. Gone are the days when cash goes straight into the pockets of the staff.
What you will need to do:
- Not make any deductions from tips received by your staff, including administration charges, other than those required by tax law.
- Ensure fairness and transparency is achieved through a written policy on tips.
- Keep a record of how tips have been dealt with.
- Deal with the distribution of a tip within the month it was paid (which can still be via a tronc).
Have your say
The Government will be seeking views from workers and employers in relation to the Statutory Code of Practice. Therefore, if you want your voice to be heard, get in touch with the British Hospitality Association or your trade association, and keep an eye open for further updates.
Further background on the proposal can be found in the Government’s response to the 2016 consultation on tipping, gratuities, cover and service charges.
Contact us
If you would like to discuss any concerns you may have relating to your hospitality business arising from this proposal, please contact Rebecca Ireland or David Salamons.
