Hospitality businesses forced to hand all tips to staff under proposed law

Restaurants and other businesses would be forced to hand over all tips to their staff under new proposals tabled in Parliament following Government delays.

Several pledges have been made in recent years to stop employers making deductions from money left for their staff by customers, although legislative action has failed to materialise.

A new Tips Bill has been brought forward by Conservative MP Dean Russell in a bid to make progress on the issue and put protections in law.

The Bill would prohibit employers from retaining tips intended for staff and also enable arrangements to be made about how tips are divided between staff.

Mr Russell, MP for Watford, told the PA news agency: “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.

“It’s always felt wrong to me 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’.”

Mr Russell said there is a need to support the hospitality sector given its struggles during the coronavirus pandemic, and this includes helping staff via a tips guarantee.

He added: “So, really, the idea of the Tips Bill was thinking, surely there must be some rule or regulation or law that means that, if someone is given a tip, they either can keep that tip and not hand it to the business, or there’s an agreement on how that tip is shared out – so if there’s a pool of tips, surely there must be an agreement in place that isn’t based on informality.

“The idea of the Bill, if I can hopefully get it through, is to make it so that effectively tips are protected for the people they’re given to, and businesses can’t assume they’ve got a right to decide what that tip is for.”

He said the Bill aims to ensure “fairness”, noting: “I think for most people, when they do leave a tip for someone, they’ve left it for that person or for the staff, not for businesses to take an extra chunk of it.”

A Government consultation launched in 2015 found restaurant customers were overwhelmingly in favour of the tips they paid going to the people who served them.

In October 2018, then prime minister Theresa May announced new laws to deal with tips but Brexit turmoil prevented the legislation going ahead.

Prime Minister Boris Johnson also outlined his desire to proceed with the idea when his October 2019 Queen’s Speech committed to bring forward the Employment (Allocation of Tips) Bill.

This was intended to “promote fairness” for workers by creating legal obligations on employers to pass on all tips in full.

Following the snap general election in December 2019, the Queen’s Speech incorporated these measures into a proposed Employment Bill – which did not materialise in the last parliamentary session.

Alok Sharma, while serving as business secretary, in July 2020 insisted the Government would bring forward the tips guarantee in law at the “earliest point” possible.

But the Queen’s Speech in May 2021 did not list an Employment Bill nor any mention of tips.

Mr Russell has now brought forward his own Private Member’s Bill, which he hopes will be considered further in the Commons on September 10 – and at the very least put the issue back on the agenda.

He wants the legislation to be “fair for all concerned” and is still developing the detail of the proposals, including what would happen if a firm does not protect tips for staff.

“I don’t want it to be an anti-business thing, it’s not about making businesses the bad guy,” he said.

“This is about making sure there’s a fairness for the staff that work in restaurants and that hospitality sector.”

Unite union national officer for hospitality Dave Turnbull said: “This Private Member’s Bill exposes the Government’s failure to introduce the long-promised fair tips legislation.

“Waiting staff, the majority of whom are on the minimum wage, keep being promised jam tomorrow by the Government but in the meantime they continue to be ripped off by unscrupulous employers.

“Not only must the Government finally bring forward fair tips legislation, but it must ensure that it is sufficiently robust to prevent it being undermined through loopholes.”

A Department for Business, Energy & Industrial Strategy spokesperson said: “Workers should get the tips they deserve, and consumers should have reassurance that their money is rewarding staff for hard work and good service.

“We will bring forward an Employment Bill, including legislation on tipping practices, when Parliamentary time allows.”