Government Makes U-Turn on Tips for Hospitality Workers

U-Turn in Tips for Hospitality Workers

The government has shelved plans to introduce legislation that would ensure that restaurant and other hospitality workers can keep all tips.

In September 2021, the government unveiled plans to overhaul U.K tipping practices. The plans aimed to help around two million people subsidise their income by ensuring that all tips go to staff.  After research found that many businesses that add a discretionary service charge to their customer’s bills, were keeping all or part of that service charge instead of passing it onto staff, the government pledged to make it illegal to withhold tips from workers.

However, the exclusion of the policy change from the Queen’s Speech made on 10th May, has been condemned by Trade Unions as a disappointing U-turn.  General Secretary of the Trades Union Congress, Frances O’Grady, has labelled the move a betrayal and condemned the government for “conn[ing] working people.”

Consumers are not legally obliged to leave a tip and under existing legislation, tips cannot count towards minimum wage pay. However, many staff working in hospitality are paid either the National Living Wage or National Minimum Wage and so tipping is strongly encouraged. Service charges, which are not the same as a tip, can be added to bills as either “discretionary” or “compulsory.” Nevertheless, these charges are subject to no specific legal rules and therefore businesses can decide whether to keep the charges to cover other business costs or pass it onto employees.

As the post pandemic world continues to move towards a cashless society, there are concerns that this has made it easier for restaurants to make their own decisions on what to do with tips paid by customers on card. This, coupled with the cost-of-living crisis which continues to hit those on the lowest incomes the hardest, has increased fears about filling the record vacancy levels that the hospitality industry is currently facing.

The plan has been dropped “for the foreseeable future” according to one senior government official. This means that the proposal will not be on the government’s agenda of policies to be pushed through parliament.  Ministers had hoped to include the change into a proposed employment bill, however that legislation has now been shelved. Other policies in the proposed bill would have included more predictable contracts, protection for pregnant employees, a single agency to enforce worker rights and the making of flexible working a default option for workers.

“If the government fails to bring forward an employment bill […] it will betray some of the lowest paid and most vulnerable workers in Britain.”

Trade Unions fear that the continued lack of support from the government, will only serve to make things more difficult for the already struggling hospitality industry.

You can read more information on the shelved proposed legislation here and stay up to date with government policies here.

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