Hospitality businesses to be banned from taking a cut of staff tips

Hospitality businesses are to be banned from taking a cut of staff tips or service charge under new laws.

The government is to make it illegal for operators to withhold any part of tips in a move it said would benefit around two million people working in the hospitality, leisure and services sectors.

Labour markets minister Paul Scully said the law would reassure customers their money was going to “those who deserve it”.

Workers will be given rights to request information relating to an employer’s tipping record and take them to an employment tribunal to seek compensation if they break the rules.

A statutory code of practice is to be introduced setting out how tips should be distributed to ensure it is done so fairly.

The move comes six years after restaurant chains including PizzaExpress, Café Rouge and Bella Italia made headlines for deducting an administration fee on staff tips paid on credit card. The companies later axed the charges.

However, this led to then business secretary Said Javid leading a consultation into tips, service charges and troncs.

The government said a move towards cashless payments had made it easier for businesses to withhold funds, with 80% of tips now paid by card. Cash tips are legally the property of staff, but currently operators can choose whether to pass card tips onto employees.

UKHospitality chief executive Kate Nicholls said ensuring staff received tips would help the industry’s ability to create jobs.

However, she added: “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.

“With restaurants, pubs and other venues struggling to get back on their feet, facing mounting costs and accrued debts, we urge the government to continue to work closely with the sector as it introduces this legislation to ensure this works for businesses and employees.”

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