Millions of bar, restaurant and other hospitality and service workers will be able to take more cash home from work as a new law banning employees from withholding tips receives Royal Assent.
The Employment (Allocation of Tips) Act 2023 received Royal Assent this week and makes it unlawful for businesses to hold back service charges from their employees.
A new statutory Code of Practice will be developed to provide businesses and staff with advice on how tips should be distributed.
Workers will also be given the right to request more information relating to their employer’s tipping record.
This will help them to bring forward a credible claim to an employment tribunal.
The change is estimated to see around £200million put back into the pockets of workers each year.
The new measures are scheduled to come into force in 2024, following a consultation and secondary legislation.
The Government will confirm an exact date for when the measures become law later this year.
Many hospitality workers often rely on tips to supplement their income and have often been left powerless when businesses fail to pass on service charges from customers.
In 2015, research found that many owners of restaurants, bars, and cafes added discretionary service charges to customers' bills but then keep some of the money themselves.
In the same year, a Government consultation found customers were "overwhelmingly" in favour of the tips they paid going to the people who served them.
Business and trade Minister Kevin Hollinrake commented: “As people face rising living costs, it is not right for employers to withhold tips from their hard-working employees.
“Whether you are pulling pints or delivering a pizza, this new law 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.”
Kate Nicholls, UK Hospitality chief executive, expressed support for the legislation, saying, “We’re pleased to support this new piece of legislation as it comes into law today and look forward to working with Government and other stakeholders on a code of practice that ensures a fair distribution of gratuities amongst all who contribute to providing great hospitality.”
