UKHospitality welcomes second reading of 'Tips Bill'

15-Jul-2022 - Last updated on 05-Apr-2023 at 11:15 GMT

A private members’ bill that would require employers to ensure all tips and service charges they receive are paid to workers in full has had its second reading in Parliament.

The Employment (Allocation of Tips) Bill would amend the Employment Rights Act 1996 to require employers to ensure that all tips, gratuities and service charges they receive or exercise control over must be paid to workers in full without deductions and by the end of the following month.

It would also introduce obligations to ensure the fairness of arrangements to distribute those tips among workers, either when distributed by the employer or via an independent tronc.

The private members bill, introduced by Watford MP Dean Russell, is designed to stop businesses from withholding tips from staff and enable arrangements about how tips are divided between workers.

“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,” says UKHospitality chief executive Kate Nicholls.

“This should also reassure prospective hospitality sector workers at a time when the industry is seeking to fill vacancies.”

While Nicholls describes the bill as a “good starting point”, she says there are further issues that need be addressed, including the length of time necessary for businesses to adapt; what she described as the “onerous” levels of red tape required; the need to disclose sensitive business information; and for tips to count towards earned income, helping those workers seeking mortgages.

“We look forward, therefore, to working on this legislation with Dean Russell MP and BEIS [The Department for Business, Energy and Industrial Strategy].”

Under the bill, the Secretary of State would be able to introduce a new code of practice about the fair and transparent distribution of tips and service charges to help to indicate what would count as a fair distribution for the purposes of the new legal obligations.

The provisions would apply to people working directly for hospitality businesses and also to agency workers in the hospitality sector.