Employers who withhold tips from workers could face tribunal claims

Employers in the hospitality sector could face tribunal claims if they withhold tips from workers, under new regulations being introduced by the government.

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 commonplace and can make up a large part of their income.

Ministers say it will ensure customers know tips are going in full to workers and not businesses.

Labour Markets Minister Paul Scully said: “Moves towards a cashless society have accelerated dodgy tipping practices, as an increase in card payments has made it easier for businesses to keep the funds.

“80% 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.”

Under the changes, if an employer breaks the rules, they can be taken to an Employment Tribunal, where they can be forced to compensate workers, often in addition to fines. It’s hoped this will create consistency for those being tipped by cash or card, while ensuring that businesses who already pass on tips fairly aren’t penalised.

The legislation will include:

• a requirement for all employers to pass on tips to workers without any deductions
• a Statutory Code of Practice setting out how tips should be distributed to ensure fairness and transparency
• new rights for workers to make a request for information relating to an employer’s tipping record, enabling them to bring forward a credible claim to an employment tribunal.

The Code of Practice will be developed in partnership with workers and employers to set out the principles of fairness and transparency.

We shall keep clients informed of developments.

Please contact us if you would like more information about the issues raised in this article or any aspect of employment law.