A new law has been implemented, forbidding businesses from withholding tips or service charges from their staff. Restaurants, pubs, hairdressers, and taxi operators are among the firms impacted by the new regulation, which requires 100% of tips to be shared among employees as of this Tuesday. While the law aims to ensure fair distribution of tips, industry leaders warn of potential additional costs for struggling businesses.
According to the law, tips must be passed to employees by the following month from their receipt, with agency workers also entitled to receive tips. Any employer found retaining tips could face claims brought to employment tribunals by the affected workers. The introduction of this law follows a Government review conducted eight years ago, prompted by criticism of some companies, especially casual dining restaurants, for their tips policies.
Industry body UKHospitality’s chief executive, Kate Nicholls, expressed support for the changes, which formalise common practices in the sector. However, she highlighted the administrative burden and potential extra costs for businesses. Minister for employment rights, Justin Madders, emphasized that this legislation is the initial step in protecting workers and ensuring they receive their fair share of tips.
The law is projected to result in an extra £200 million going to workers instead of employers, according to the Department for Business and Trade. The introduction of a new framework by the British Beer and Pub Association aims to create consistency and transparency in tip distribution. Unite general secretary Sharon Graham commended the legislation for assisting workers in challenging unfair practices related to tip deductions by employers.