Workers will be entitled to keep 100% of their tips under a new law expected to be announced this week.
Business secretary Kwasi Kwarteng is to reveal new legislation that will prevent restaurants and other employers where customers tip workers from keeping the service charge levied when customers pay by card.
Although existing legislation bans organisations from keeping workers’ cash tips, firms can currently choose not to pass on the service charge from card payments. The proposed change in law will mean that they must pass these service charges on to staff.
A government source told the Mail on Sunday: “Workers going above and beyond for their customers can now rest assured that their hard-earned tips will be going directly in their pockets and nobody else’s.
“We’re putting an end to dodgy tipping practices and making sure that hard work pays off. We are also levelling the playing field for businesses, ensuring that good firms which give all the tips to workers are not undercut by the firms which keep the money.”
The new legislation follows a private members’ bill tabled by Conservative MP Dean Russell in June.
Russell said earlier this year: “When we look at the role that many people have when working in bars or restaurants and so on, the tips are often seen as part of the salary in a way – rightly or wrongly.
“It’s always felt wrong to me that businesses can take the tips that have been given by the customer directly to that individual or to the staff for businesses to go ‘Well, actually, that’s part of the payment for what they’re getting’.”
“I think for most people, when they do leave a tip for someone, they’ve left it for that person or for the staff, not for businesses to take an extra chunk of it.”
A government spokesperson said: “We are doing everything we can to back hospitality staff as the sector recovers.
“Workers should get the tips they deserve, and customers should have reassurance that their money is rewarding staff for their hard work and good service. Further announcements on this key issue will be made shortly.”
Plans to ban employers from taking staff tips were first announced by Theresa May’s government in 2018, alongside plans to prevent excessive deductions from being made from tips left by customers.
Hospitality firms are currently experiencing a chronic shortage of staff. According to the latest figures from the Office for National Statistics there was a 75.4% increase in vacancies in the accommodation and food services sector in June to August 2021.
Three in 10 hospitality firms found job openings more difficult to fill than usual between 23 August and 5 September 2021.
Kate Nicholls, chief executive of trade body UK Hospitality, said that part of the reason why hospitality has struggled to fill vacancies is the fact that it was the last sector to fully reopen after the Covid-19 lockdown.
“The latest figures once again show the unique impact the pandemic has had on the hospitality sector – but also its potential to be at the forefront of the economic recovery with the right support and conditions,” she said.
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“We are a job creator and can drive economic growth and job creation, but further support from government is required to realise this. Measures we are calling for include the long-overdue reform of business rates and a permanently lower rate of VAT for hospitality.”
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