Hospitality Businesses To Be Banned From Retaining Tips Meant For Staff

The government is to make it unlawful for operators to withhold any part of gratuities/tips left by customers in a move it said would benefit around two million people working in the hospitality, leisure and services sectors.

Following campaign by Dean Russell, the Tory member for Watford, to pass legislation protecting the money meant for staff, the small business minister Paul Scully confirmed he measures will be included in the upcoming Employment Bill.

Mr Scully said the law would reassure customers their money was going to “those who deserve it”.

Current legislation prohibits restaurants from retaining cash tips, but when a customer tips by card they can choose whether to keep it or pass it on to their staff. Several chains have been criticised for keeping all or part of the service charge paid by on card. The change will mean that waiting staff are entitled to 100 per cent of their tips.

Living Wage

The Department for Business (BEIS) acknowledged that “most hospitality workers, many of whom are earning the national minimum wage or national living wage, rely on tipping to top up their income.”

The Living Wage Foundation welcomed the changes but pushed for the government to ensure full-time work provides enough money for people to live on.

“Any move to improve pay in low-paid sectors like hospitality is welcome, but if this work is to be truly valued, we need to see more people lifted onto a real Living Wage,” the foundation’s interim director, Graham Griffiths said. We all need a wage that meets our everyday needs.”

Earlier this year workers in the hospitality sector staged a protest outside the Department of Business in protest at the government’s repeated failure to introduce long-promised fair tips legislation.

UKHospitality chief executive Kate Nicholls said ensuring staff received tips would help the industry’s ability to create jobs.

However, she added: “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.”

Dean Russell, the Conservative MP for Watford said: “When we look at the role that many people have when working in bars or restaurants and so on, the tips are often seen as part of the salary in a way — rightly or wrongly,” Russell said in July. “It’s always felt wrong that businesses can take the tips that have been given by the customer directly to that individual or to the staff for businesses to go, ‘Well, actually, that’s part of the payment for what they’re getting’.”