Sharing Tips & Your Rights
Sharing tips – What’s the law & what might change?
In September 2021 the Government announced that a new law would be passed requiring employers to pass all tips to their workers.
Tips will include the various gratuities and service charges that are often added to a bill, and must in turn be paid onto workers without any deductions.
Further the law will require the employer to distribute tips in a “fair and transparent” manner, in situations where the employer has significant influence or control over how tips are allocated.
A Code of Practice is planned to set out guidelines for how this might be achieved. For example, in a restaurant, this would mean that service charges added to a bill must be shared in a fair way with those who not waiting staff, such as those working in the kitchens.
As a part of this reform, the Governments also proposes a new law that would give workers the right to make a request for information relating to an employer’s tipping record.
This would be necessary in order to provide them with the information on raising a grievance: for example, a worker might know that they were tipped a certain amount in a month, but then received much less.
However, whether they have a claim at all would depend, to take a simple example, on whether the employer was keeping the difference, or instead distributing it to other staff that did not generally receive tips.
Without such information a worker would not know whether they had any claim at all. The requirement to provide this information, presumably to be backed up by a potential claim if it is not provided, should also ensure employers are more likely heed the new law.
Although no details are provided, it seems likely that this will function in a similar way to a request for flexible working or consulting over a redundancy, where a complete failure to follow the relevant legal procedures – as opposed to following them and making a decision the worker is not happy about – can result in awards of up to eight weeks pay.
The Government estimates that this change will benefit around 2 million workers in the hospitality industry. Many of these have suffered a very significant loss of income because this industry was hit particularly hard by the pandemic, even when it was lawful for hospitality business to open they often did so with significant restrictions such as table only service in pubs and only small groups allowed.
This was exacerbated by the way in which furlough money was calculated which was almost always based on “base wages” – typically just the National Living Wage – and so tips were not included.
Alongside this, there has been a vast increase in the number of transactions made by card. This has been increasing anyway, but was brought forward by the pandemic, not least because many businesses used the pandemic to refuse to accept cash at all.
The government has estimated that around 80% of all UK tipping now takes place by card, and this figure is only likely to increase. This means that the employer has the capacity to control the vast majority of tips, and can therefore easily enforce distributing them fairly.
Although the government announced in September 2021 that such new laws would be passed “as soon as parliamentary time allows”, there have been no real developments on this matter since the announcement.
However, last week the government made a further statement they were committed to this reform, and also to the new law that would give workers the right to make a request for information, enabling them to more easily bring claims.
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This content is provided free of charge for information purposes only. It does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of our company. For employment law advice please get in contact and speak to your employment law solicitors.
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