The UK government said on Friday that it will make it illegal for employers to withhold tips from workers under new regulations for the country’s hospitality industry.
Most hospitality workers, many of whom earn the minimum sector wage, rely on tipping to top up their income. But research shows that many businesses that add a discretionary service charge onto customer’s bills are keeping part or all of these service charges, instead of passing them onto staff.
“Unfortunately, some companies choose to withhold cash from hardworking staff who have been tipped by customers as a reward for good service,” said UK Labour Markets Minister Paul Scully.
“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,” he said.
The move is set to help around 2 million people working in one of the 190,000 businesses across the hospitality, leisure and services sectors, where tipping is common place and can make up a large part of their income. This will ensure customers know tips are going in full to workers and not businesses, ensuring workers receive a fair day’s pay for a fair day’s work.
The Department for Business, Energy and Industrial Strategy (BEIS) said an increase in card payments has made it easier for businesses to keep the funds. Around 80 per cent of all UK tipping now happens by card, rather than cash going straight into the pockets of staff. Businesses who receive tips by card currently have the choice of whether to keep it or pass it on to workers. The new regulation is aimed at creating consistency for those being tipped by cash or card.
Under the changes, if an employer breaks the rules they can be taken to an Employment Tribunal, where employees can be forced to compensate workers, often in addition to fines.
The government said the tipping legislation will build on a range of government measures to protect and enhance workers’ rights.