July 16, 2022

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A new bill has been introduced which will make it illegal for employers to withhold tips from staff working in restaurants and the service industry.

The government-backed Tipping Bill will give customers the confidence in knowing their tips go towards hard-working staff, who face pressures caused by global inflation and the cost of living crisis.

The overhaul of tipping processes is expected to benefit more than two million workers in the UK across the hospitality, leisure and services industry, who tend to earn close to National Minimum Wage and rely the most on tips.

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The Employment (Allocation of Tips) Bill was introduced by Dean Russell MP and received backing from the government. The legislation will ensure that all tips go to staff by making it unlawful for businesses to hold back well-earned service charges from their employees.

Business Minister Jane Hunt said: “At a time when people are feeling the squeeze with rising costs, it is simply not right that employers are withholding tips from their hard-working employees.

“Whether you are pulling pints or greeting guests, today’s reforms will ensure that staff receive a fair day’s pay for a fair day’s work – and it means customers can be confident their money is going to those who deserve it. I particularly want to tip my hat to the work of Dean Russell MP and all the campaigners who have helped make the Tipping Bill a reality.”

As part of the new legislation, a new statutory Code of Practice will be developed to provide businesses and staff with advice on how tips should be distributed.. Employees will also be given the right to see their employers’ tipping record, which will enable them to bring forward any credible claims to an employment tribunal.

Dean Russell, Conservative MP for Watford, said: “I am delighted that my Tips Bill has passed second reading in Parliament. It is fantastic that we are on track to securing a fair deal for millions of people working in hospitality across the country.

“It has always felt wrong that some employers have retained tips intended for their staff. This new legislation will halt this practice, particularly given the current challenges around the cost of living. I would like to thank all of the businesses and stakeholders that have got in touch to voice their support.”

UK Hospitality Chief Executive, Kate Nicholls, added: “Tips and service charges provide a significant and welcome boost to hospitality employees’ take-home cash. So we’re delighted to see this proposed legislation recommend that employers can set a fair distribution policy for staff, meaning they all benefit. This should also reassure prospective hospitality sector workers at a time when the industry is seeking to fill vacancies.

“Today’s reforms follow a range of government action to support people with the cost of living and help those on lower incomes keep more of what they earn. Most notably, earlier this year the government increased the National Living Wage to £9.50 per hour – equivalent to an extra £1,000 a year for a full-time worker – with a full campaign which encouraged workers to check their pay.

“In addition, the government recently announced a widening of the ban on exclusivity clauses, giving the lowest paid workers flexibility to top up their pay and work multiple jobs if they wish. The reforms come at a time when there are more employees on payrolls than ever before – and unemployment has reached an all-time low.”

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