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Here’s a tip: don’t take mine!


What is the news?

Prime Minister Theresa May has promised that new legislation will be introduced to ensure staff get to keep all their tips without employers making deductions.

What does the news means?

The announcement follows a Government’s consultation in 2016 which found that restaurant customers were ‘overwhelmingly in favour of the tips they pay going to the people that serve them’. Legislative changes will mean that chains such Bella Italia and Prezzo who have previously made deductions of 10% from service charges, will no longer be able to interfere with tips left for waiting staff. It would also bring an end to practices such as those adopted at TGI Fridays where 40% of tips received via a credit or debit are distributed amongst kitchen staff (instead of the Company incurring additional costs through giving them a pay rise).

Currently, the government has a Code of Best Practice which covers how employers should handle tips. However, this code is voluntary and does not need to be followed.

What do we think of the news?

Tips and gratuities have been a hot topic over the last few years (tax treatment, national minimum wage, fair pay projects). Despite this, the consultation shows that there are still ongoing issues, in fact press reports suggest that employers still use tips to top up wages which is against the law. Reforms such as these continue to work towards fairer, more employee-centred practices in the workplace which is in line with the general political and legal direction of employment law.

These new plans should put in proper protection for employees receiving tips – who are typically on low wages working in the service industry. It is important that companies are not exploiting the hard work of employees for their benefit and taking away their personal rewards. This is important, not just because of fairness, but to ensure employee engagement, loyalty and positive external branding and ethos of the companies to their customers.

No timeframe has been given for the introduction of these new laws, however the government has commented that it will be ‘at the earliest opportunity’, which, we have a feeling, may not be for a while yet given the current to-do list.

If you would like to talk through any concerns you may have in relation to your obligations as an employer, you can contact Associate, Siobhan Howard-Palmer on T: 0161 358 0537 or E: siobhanhoward-palmer@hrclaw.co.uk.

This contains a general overview of information only. It does not constitute, and should not be relied upon, as legal advice. You should consult a suitably qualified lawyer on any specific legal problem or matter.