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UK govt to introduce tipping bill

The UK government has backed a new tipping law and extended a measure to allow hospitality businesses to sell alcohol as part of takeaway orders.

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A new tipping bill will make it illegal for businesses to withhold gratuities from workers

On Friday 15 July, the UK government revealed it would back the Employment (Allocation of Tips) Bill to ensure hospitality workers receive their tips by making it illegal for employers to retain service charges. The bill was introduced by MP Dean Russell.

Last September, the government had pledged to introduce legislation to ban venues from withholding tips from employees, a move that had been delayed by five years.

According to the government, the overhaul of tipping practices will benefit more than two million UK workers across the hospitality, leisure and services sectors.

The government also noted that the move towards a cashless society has ‘exacerbated the problem’ of companies keeping card gratuities.

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.”

As part of the Bill, a new statutory Code of Practice will be developed to provide businesses and staff with guidance on how tips should be distributed.

Furthermore, workers will receive a new right to request more information relating to an employer’s tipping record, enabling them to present a credible claim to an employment tribunal.

Kate Nicholls, chief executive of trade body UK Hospitality, welcomed the move.

She said: “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.”

Manipulation of tips

However, trade union Unite hit back at the long-delayed move.

Unite’s national officer for hospitality, Dave Turnbull, said: “In the six years since workers were promised action on tips an awful lot of money has been lost by low paid workers.

“This bill has been long in the making but it certainly cannot be the last word in tips protections. As the union fighting for reform for years, it has been the pressure of the workers that has brought even this first step towards change. It is vital that what is passed into law has the full confidence of the hospitality workforce.

“Sadly, at this stage we are not confident that these measures will address the problems with tipping practices across the hospitality sector.”

Unite said it had received ‘constant complaints’ from its members regarding the ways that employers ‘manipulate tips’, including by sharing gratuities with higher-paid salaried workers.

Furthermore, the union said minimum wage increases are ‘wiped out by an unfair reallocation of tips’.

Unite noted the problematic use of tronc systems for tips paid on card, which are ‘exploited’ by businesses.

The union said: “Current legislation requires a tronc if electronic tips distributed through a company payroll are to be exempted from national insurance. According to Unite, for the bill to have a proper impact it needs to scrap troncs by exempting tips distributed through payroll from national insurance.”

Takeaway alcohol measures extended

Meanwhile, the temporary measure to allow businesses to sell alcohol through takeaway and delivery orders, and serve it in outdoors areas, has also been extended, UK Hospitality said.

The change to the Licensing Act came into force in July 2020 to provide a boost to hospitality firms during the pandemic. The measure was due to expire in September 2022 but has now been extended by a further 12 months.

UK Hospitality and other industry organisations had been urging the Home Office to allow on-trade businesses to continue to provide alcohol outdoors and through takeaway orders.

Nicholls added: “This decision to extend the off-sales easement is the right one, and hugely significant. If this had lapsed, it would have caused further problems for many hundreds of hospitality businesses already struggling to survive.

“But persistent lobbying by UK Hospitality and others has convinced government that deregulation measures such as this can help businesses, at what is a critical time in their efforts to stay afloat.

“This will benefit those hospitality businesses that have successfully evolved operating models to incorporate takeaway and outdoor sales and allow them to continue to do so.”

The trade body said it will now work with the UK government on a ‘long-term solution beyond September 2023, which will aim to dovetail with the forthcoming permanent pavement licence regime’.

Furthermore, UK Hospitality will continue to carry out ‘broader, ongoing deregulation work to aid the hospitality sector’s recovery’.

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