What now for the tips legislation?

It may have been dropped by government, but that doesn’t mean that self-regulation of fair distribution isn’t possible, says Peter Davies

The news that government has decided to abandon proposed legislation over tipping has been met with everything from celebration to outrage. Despite tweets from the business minister Paul Scully that the “intention to legislate” remains, it now seems that the proposals, outlined as far back as 2015, will not now see the light of day anytime soon.

Across the sector the reality is that the vast majority of businesses do pass tips and service charges (less those unavoidable costs such as card fees and commissions) to staff, usually via tronc arrangements, which benefits those employees as well as businesses and ultimately consumers. Government has consistently supported well-managed tronc systems and the risk of the proposed legislation was that those good businesses would be adversely affected.

I, along with many others, spent considerable time in showing government the dangers to businesses of bad legislation, the good practice that exists throughout the sector, and the changes that many operators have put in place over the last five years which mean that any problem that did exist back in 2016 is a much smaller problem today. It is encouraging that ministers appear to have listened to this and recognised the sector for the steps it has taken.

 

“It would be a mistake, in my view, for those businesses treating staff well to simply sit back and forget the issue”

As with any business sector, however, there will always be a minority who do not act in line with good practice and who still keep an unreasonable amount (if not all) of tips for themselves. While only a minority, it is these businesses that attract adverse publicity which then risks damaging the sector as a whole. That adverse publicity is seized upon by those who would seek to denigrate the sector or who wish to overturn and do away with distribution arrangements that recognise and reward the whole team who deliver the guest experience (including back of house teams) as opposed to just servers.

If legislation has indeed been ditched, it would be a mistake, in my view, for those businesses treating staff well to simply sit back and forget the issue. That risks allowing bad businesses to continue to act poorly with further ongoing reputational damage. We want to showcase the best that hospitality can offer in order to retain staff within the sector and attract more of the diminished labour pool to see hospitality as a career of choice. Publicly playing fair with tips is one part of that.

Most businesses actually have a positive story to tell when it comes to tips. They operate fair and visible tronc arrangements that recognise the whole team, and distribute all proceeds after costs. It’s time that we promoted and publicised this, telling our teams that we are good employers who value and respect them, and telling our customers that they can tip or pay service charge with confidence. The days of keeping quiet have gone – that is what has allowed some to perpetuate a myth that “all businesses are bad and you can’t trust them” which has tarred many others unfairly.

As someone who promotes good practice I was not opposed to legislation, provided it was well-drafted and only targeted those businesses who deserved to be targeted. But that was always going to be a challenge, and this week’s news is perhaps a recognition by government that they should step back and allow self-regulation to continue to address and remedy the diminishing minority who still do not play fair by their staff or their customers.

Peter Davies is the managing director of WMT Troncmaster Services