UK restaurants to be banned from keeping staff tips

Businesses will no longer be able to take share of service charges paid by card under new legislation

Restaurant owners will be banned from taking customer tips and service charge payments from workers under legislation being introduced by the government five years after a ban was first proposed.

The law, which is designed to help about 2 million waiting staff and other hospitality workers, follows a series of high-profile stories about companies deducting money from card payments intended for waiting and kitchen staff.

The government said research had shown many businesses that add a discretionary service charge to customer’s bills were keeping part or all of that cash, instead of passing it to staff.

Some businesses have used the cash to top up managers’ or chefs’ wages and others have used it to support profits.

A change in the rules has become urgent after the pandemic spurred a switch to cashless payment with 80% of all UK tipping now happening by card, making it easier for businesses to keep funds. Cash tips are already protected by law.

Paul Scully, the labour markets minister, said: “Unfortunately, some companies choose to withhold cash from hardworking staff who have been tipped by customers as a reward for good service.

“Our plans will make this illegal and ensure tips will go to those who worked for it. This will provide a boost to workers in pubs, cafes and restaurants across the country, while reassuring customers their money is going to those who deserve it.”

Under the law, it will be illegal for employers to divert tips and service charges from restaurant workers. Those breaking the rules can be fined and forced to compensate workers. However, any legal action will be reliant on workers bringing an employment tribunal case.

A statutory code of practice to be developed after further consultation with businesses, workers and other stakeholders will set out how tips should be distributed to ensure fairness and transparency. Workers will also have a new right to make a request for information relating to an employer’s tipping record, enabling them to bring an employment tribunal claim.

The Unite union, which has led a long-running campaign for legislation on tips, said the five-year delay had cost waiting staff an estimated £10,000 each in lost tips.

Sharon Graham, Unite’s general secretary, said: “It’s shocking that this group of mainly young workers has had to wait five years for government action to tackle the tips scandal.”

The union warned that the new code must not leave workers open to abuse through unfair distribution systems.

Kate Nicholls, the chief executive of industry body UKHospitality, urged the government to work closely with businesses and employees to make the system work for all as she said venues faced mounting costs.

“For hospitality businesses, though, customers tipping with a card incurs bank charges for the business, and many also employ external partners to ensure tips are fairly distributed among staff,” she said.

The government pledged to take action to protect workers’ tips and service charges in 2016 after a string of revelations about businesses taking a slice of the payments. It committed to legislation in 2018 after a lengthy consultation. The law is now set to be put before parliament as part of a wider employment bill, although there is still no firm timetable.

Concern about tipping practices began in 2015 when the Observer revealed that Pizza Express was taking 8p of every £1 paid when tips were given by card. It later emerged that chains including Giraffe were also taking a cut of tips. Although Pizza Express, Giraffe and many other chains dropped the policy after a public outcry, unsavoury tipping practices have continued to emerge.

Most recently, the Guardian revealed that Pizza Express waiting staff were losing a slice of tips in order to bump up pay for kitchen workers. Waiting staff at the burger chain Byron, meanwhile, fear their tips are about to be diverted to increase pay for kitchen workers and restaurant managers.


Sarah Butler

The GuardianTramp

Related Content

Article image
New Covid variant and looming Brexit disruption deepen UK economic gloom
Our latest snapshot of key economic indicators show retail sales falling, job losses soaring, GDP growth and stock market stalling

Richard Partington Economics correspondent

23, Dec, 2020 @12:00 PM

Article image
One-third of Lloyds bank staff are struggling financially, survey reveals
Union poll contrasts situation of many staff with chief executive who took home £6.3m in 2018

Kalyeena Makortoff Banking correspondent

09, Feb, 2020 @2:18 PM

Article image
How has the Brexit vote affected the economy? March verdict
Each month we look at key indicators to see what effect the Brexit process has on growth, prosperity and trade in the UK

Richard Partington

27, Mar, 2018 @12:27 PM

Article image
British consumer keeps UK plc afloat as key sectors start to sink
As a no-deal Brexit looks increasingly likely sterling is starting a steep slide and growth is stalling

Richard Partington

31, Jul, 2019 @5:00 AM

Article image
Beware scaling back UK furlough scheme too soon, warns Resolution Foundation
Thinktank warns of ‘dangerous complacency’ with strength of jobs market and pay growth both weaker than thought

Jasper Jolly

27, Jun, 2021 @11:01 PM

Article image
Hammond needs to look beyond road-building to lift UK's productivity
Picking infrastructure is easy, but unless low pay in the services sector is addressed productivity goals will remain elusive

Katie Allen

27, Nov, 2016 @1:45 PM

Article image
Cadbury staff get sweet relief from inflation with new pay deal
Workers at three sites win inflation-linked pay deal for the next two years, and also get an increase in maternity pay

Richard Partington

19, Sep, 2017 @5:03 PM

Article image
The flat UK economy still points to a Boris Johnson election victory
Ted Heath’s 1974 election gamble offers a bad precedent for the PM. Heath lost, but the economy makes it Johnson’s to lose

Larry Elliott

08, Sep, 2019 @10:34 AM

Article image
Hinkley Point C: fresh strike threat over pay dispute
Nuclear plant construction facing further delays as unions declare plans to ballot civil engineers in row over bonuses

Rob Davies

21, Sep, 2017 @6:26 PM

Article image
Zizzi cuts staff perks days after introduction of new living wage
Pizza chain reduces workers’ tips and restricts choice of free meals in changes it says are not linked to fair pay scheme

Hilary Osborne

25, Apr, 2016 @6:04 PM