A bill that makes it illegal for businesses to withhold tips from workers has received Royal Assent.
The Employment (Allocation of Tips) Act 2023 – or Tipping Bill – will ensure that around 2 million workers have their tips protected and can see an employer’s tipping record.
The government estimates that employees will collectively receive around £200 million back into their wage packets by retaining tips that otherwise would have been deducted.
The bill will also bring in a new statutory code of practice that will provide employers and staff with guidance on how tips should be distributed.
If a worker decides to request more information on an employer’s tipping record, this information could enable them to bring a claim to an employment tribunal.
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The legislation will not come into force until 2024, following a consultation and secondary legislation.
Virginia Crosbie, Conservative MP for Ynys Môn, was one of the sponsors of the bill and welcomed its passing into law.
She said: “Driving it forward was all about fairness for workers and for those who give tips for good service. It was never right that a minority of companies could pocket tips when the public wanted them to go to the person who served them or made their food.
“The law will now boost wages for what are often lower paid jobs and not boost company profits at the expense of hard-working staff. But it is also about valuing the people who do important jobs in our economy, especially in tourist areas like Anglesey, and I am proud to have played my part.”
The new regulation will have the greatest impact in the hospitality, leisure and services sectors, where many employees rely on tips to top up their pay.
The government first confirmed it would introduce legislation to prevent establishments keeping tips from workers in 2021.
There had been discussions about regulating tips in the hospitality industry for some years previously, with several large chains facing criticism over taking service charges from customers but not passing these on to staff.
Kate Nicholls, chief executive of industry body UK hospitality, said: “Fantastic hospitality experiences don’t happen without a huge effort from our teams, both front and back of house, and tips are a generous way of customers showing their gratitude, while providing a welcome boost to employees’ earnings.
“Tips are just one part of what makes working in hospitality a great job and career.”
Business and trade minister Kevin Hollinrake added: “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.”
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Confirmation of the date of commencement for the legislation will come later this year, and the associated code of practice will be drawn up after a formal consultation, also this year.
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