There’s now a ‘Tipping’ Point for Staff Gratuities!

Previously in respect of tips given to staff, the UK Government pledged to take action. In 2016 they started a consultation on tips, gratuities, cover and service charges. In 2018 they announced their intention to legislate, to provide that tips left for workers are retained in full by those workers.

The government estimates that this new legislation will benefit just short of 2 million workers who work in leisure, hospitality and other service sectors such as the travel industry. Think about your typical tour guide, who normally receives tips at the end of the tour. These tips will now become payable to the tour guide, depending on what scheme you will put in place for distribution of such staff gratuities. As a consumer, the worry of whether the company or the staff member gets the tip will no longer be there. Also a reminder to employers that tips do not count towards the calculation of National Minimum Wage.

So once passed, what will the legal requirements be?

  • All staff gratuities will need to be passed on to workers, and only those deductions required by law can be made by the employer.
  • Employers will need to adopt a system of distributing tips in a fair and transparent way.
  • A written policy and record keeping on tips and how they have been shared.
  • Timescales for giving staff the tips, normally by the end of the month in which the tip was given.
  • Staff will be allowed to ask for information on tipping, which employers must respond to within 4 weeks.

For some employers, the new rules simply legislate a custom and practice that they may have had in place for some time. However for those employers for whom this will be new, they will need to make changes. If employers choose to ignore the new rules, they could be faced with fines and complaints made by staff to an employment tribunal. As an employer you could wait until the position becomes law. However given that the proposed changes have already received significant publicity, and the changes are going to happen, it is  something that employers should already be considering if they want to be an employer of choice in an increasingly competitive recruitment market.

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This article was originally published on: 27 September 2021

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