A new law has been implemented banning employers from keeping staff tips, affecting businesses such as restaurants, pubs, hairdressers, and taxi operators. The legislation mandates that 100% of tips must be shared among employees starting this Tuesday. While the move is aimed at ensuring fair distribution of tips, industry leaders have raised concerns about the additional costs it may impose on struggling businesses.
Under the new law, tips must be transferred to employees by the end of the following month from when they were received. The distribution of tips must adhere to a government code of practice to ensure fairness. Additionally, agency workers are also entitled to receive tips in accordance with the rules. If employers fail to comply and withhold tips, employees can take their case to an employment tribunal from now on.
The origins of this law can be traced back eight years when a Government report recommended its implementation following criticisms of companies, especially casual dining restaurants, for their handling of tips. Some notable cases included Pizza Express, Giraffe, and Wahaca, which were accused of inappropriate tip deductions. The Department for Business and Trade estimates that this new legislation could result in an additional £200 million being received by workers rather than being kept by employers.
Industry bodies like UKHospitality have expressed support for the new rules, emphasizing that tips earned through hard work should rightfully belong to the employees. However, they also acknowledge that the changes may bring administrative burdens and additional costs for businesses. The sector, already facing financial challenges, urges the Chancellor to ease the burden, particularly with impending business rates increases.
Minister for employment rights, Justin Madders, highlighted that this law is just the initial step in protecting workers and prioritising their well-being in the economy. Further measures regarding tipping are expected to be introduced to ensure equitable treatment of workers. The British Beer and Pub Association (BBPA) welcomed the new framework, stating that it will create a level playing field for businesses in tip distribution, benefiting both current and new staff members.
Unite general secretary Sharon Graham commented that the legislation empowers workers to challenge unfair practices by employers regarding tips. With the implementation of this law, workers in various sectors are poised to benefit from more transparent and consistent practices in tip sharing. The changes signify a significant shift towards safeguarding workers’ rights and ensuring fair treatment in the workplace.