Where will your tip go? New law stops businesses pocketing staff tips

If an employer breaks the law and retains tips, a worker will be able to bring a claim to an employment tribunal, Stacey Foster reports

A new law has come into force meaning staff must be given 100% of all tips or service charges.

From Tuesday businesses such as pubs, restaurants, cafes and taxi firms are no longer allowed to keep any tips paid by their customers and must share them among their workers.

Tips must now be passed to employees by the end of the following month from when they were received.

If an employer breaks the law and retains tips, a worker will be able to bring a claim to an employment tribunal.

However, hospitality industry bosses have cautioned that the move could hit under-pressure businesses with an "additional cost".

It has said that distribution of these tips must be "fair", in line with a government code of practice published earlier this year.

Agency workers will also be entitled to the tips as part of the rules.

The change comes eight years after a government report first suggested the policy could be introduced following a review.

This came after a number of companies, particularly casual dining restaurants, came under criticism over their tips policies.

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Pizza Express and Giraffe were accused of abusing a voluntary code of conduct, while Wahaca was criticised for deductions on certain employees' tips, although these have all since changed their policies.

The Department for Business and Trade predicted that the new law will mean a further £200 million will be received by workers rather than their employers.

Kate Nicholls, chief executive of industry body UKHospitality, said: "The people working in hospitality are the lifeblood of our sector and these changes rightly ensure tips hard-earned through excellent service will end up entirely in their pockets.

"We completely support the changes coming into effect today, which will formalise what is already commonplace in the sector as businesses have been preparing for this legislation for a number of years.

"New rules naturally come with an administrative burden and businesses will see some additional cost as they work through them in practice.

"It's another example of costs being placed on a sector that can least afford it, and we continue to urge the Chancellor to bring down hospitality's cost burden at the Budget, primarily through taking action to avoid the billion-pound business rates bombshell set to hit the sector next year when relief ends."

Justin Madders, minister for employment rights, said: "This is just the first step of many in protecting workers and placing them at the heart of our economy.

"We will be introducing further measures on tipping to ensure workers get their fair share of tips."

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