The UK government has implemented a new rule that prohibits businesses from withholding tips or service charges from their employees. All tips, whether given in cash or by card, must legally be shared between workers, benefiting millions of people working in cafes, pubs, restaurants, taxi firms, and hairdressers. Failure to adhere to the law will result in a worker being able to make a claim to the employment tribunal.
The new rule has been welcomed by many, but some have warned that it could place an additional cost burden on businesses already under strain. The law has been implemented eight years after the government’s first report suggesting the policy. According to the UK’s Department of Business and Trade, 80% of tipping happens through card payments, making it easier for businesses to retain the money. It predicts that the new legislation will result in £200m being given directly to workers, rather than their employers.
Katie Nicholls, the CEO of trade body UK Hospitality, said that she welcomes the move and that hospitality workers are crucial to the sector. She added that the new rule meant hard-earned tips would end up in their pockets. However, she expressed her concerns over the additional costs placed upon businesses already struggling.
The new legislation follows criticism of some companies, mainly casual dining restaurants, for not distributing tips correctly to their staff. CEO Nisha Katona said that the new legislation would protect young people from employers who might choose not to share tips. However, she noted that it could hit some businesses that were unprepared. Emma Webb from The Kitchen in Ilminster, Somerset, stated that the new rule would not affect her business. “We have jars with everybody’s name on them and at the end of the day, all the tips get shared out between all of the staff,” she said.
Sharon Graham, general secretary of the Unite union, expressed concern over how businesses would interpret the need to distribute tips “fairly.” She believed that rogue employers might continue to decline to share tips with workers, despite the new legislation. The Northern Ireland executive has been contacted regarding whether they will implement the new rule. Labour’s Justin Madders, the Minister for Employment Rights, stated that the new rule was the first step in safeguarding workers and placing them at the center of our economy
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