In a new law that will make workers in the hospitality industry happy, the U.K. will ban restaurant owners from collecting customer tips and service charge payments from their staff. This ban will help the over 2 million workers in the hospitality industry and came after several high profile stories revealing that companies deduct percentages from card payments meant for kitchen and waiting staff.
The government also claimed research shows that many businesses that add discretionary service charges to the customer bills kept all or part of this money instead of passing it to the staff. In some cases, businesses used the money to increase the wages of their chefs or managers, while others have added it to the profit.
Although the ban was first proposed about five years ago, it has become necessary due to the pandemic, making cashless payments more prevalent. Now, about 80% of all tipping in the U.K. happens through card payments which means without the law; restaurant businesses can easily keep the money for themselves. There’s already a law protecting cash tips, so it’s only rational for one applicable to card payments to follow.
According to the Minister for Labour Markets, Paul Scully, some companies decide to “withhold cash from hardworking staff” tipped for good services by customers. This new law will end that and ensure those who work for the tips receive them. This will encourage workers in the hospitality business, and customers would be more open to giving tips, knowing their money is going to those who deserve it.
The law will not only make diverting tips illegal, but there will be fines for those who break the rule, and they’ll have to compensate workers. However, only workers can institute an employment tribunal case to enforce the law.
There will also be a statutory code of practice to ensure the fair and transparent distribution of tips. This would be developed based on consultation with all stakeholders, including workers and businesses. Workers will also have the request for information about employers tipping records.
The Unite union, an organization that has been at the forefront of the call for tipping legislation, stated that workers have lost up to £10,000 each due to the delay in making the law. It further called for the government to ensure the new code protect the workers completely from abuse resulting from unfair distribution systems.
On her part, the chief executive of UKHospitality, Kate Nicholls, urged that authorities work with businesses and workers to ensure the law doesn’t harm anyone. She pointed out that businesses incur bank charges, and running costs are currently increasing.
Concerns about unsavoury tipping practices started in 2015 after reports that Pizza Express was taking a cut from every tip through the card. Other reports soon emerged showing many businesses, including Giraffe was doing this. Although both companies dropped the policy then, the practice continued among many others.
The government first pledged to do something about this issue in 2016, and in 2018, it decided on passing a law on it. Now, the law will be before the parliament. However, there’s no timeline on how long it’ll take before the proposal, which is part of the employment bill, will become a law.
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