New legislation comes into effect today across Wales, banning businesses from withholding tips or service charges from their staff. Starting on October 1st, establishments including restaurants, pubs, hair salons, and taxi services will be required to distribute 100% of tips among employees as per the new rules. The hospitality industry leaders have raised concerns about the potential additional costs this measure could impose on already struggling businesses.
Employees must now receive their tips by the end of the month following the one in which they were given, as outlined by the law. The distribution of tips should be deemed “fair”, following a government code of practice released earlier this year. Furthermore, agency workers will also be entitled to receive tips under these regulations. Failure to comply with the law by keeping tips could lead to an employer being taken to an employment tribunal by an employee.
This development comes following a government report from eight years ago that initially recommended such changes after scrutinising tipping practices, particularly at casual dining chains. Brands like Pizza Express and Giraffe faced allegations of not adhering to a voluntary code, while Wahaca was criticised for making deductions from staff tips, although all have since adjusted their policies. The UK Department for Business and Trade estimates that this law will lead to an additional £200 million going to workers instead of their employers.
UKHospitality’s Kate Nicholls welcomed the new tipping laws, emphasising the importance of ensuring that tips earned through excellent service end up with the employees who worked hard for them. While supportive of the changes, Nicholls also acknowledged the administrative challenges and additional costs that businesses may face in implementing the new rules. She urged the government to reduce the burden on the hospitality sector, especially with looming business rate increases next year.
Minister for Employment Rights, Justin Madders, indicated that this legislation is the first step towards protecting workers and placing their interests at the centre of the economy. Additional measures related to tipping are expected to be introduced to further ensure that workers receive their fair share. The British Beer and Pub Association’s Andrew Tighe highlighted the new framework’s role in promoting consistency and transparency in distributing tips, benefiting both existing and new staff.
Unite general secretary Sharon Graham praised the legislation for empowering workers to challenge unfair practices by employers regarding tips. The new law is aimed at establishing a level playing field for businesses, ensuring that all establishments pass on tips to their staff. These regulations mark a significant shift in tipping practices, providing a fairer distribution of tips and ultimately benefiting employees across various sectors in Wales.