9 takeaways from The Caterer’s Tipping Summit

3 Tips must be distributed promptly 

All tips, gratuities and service charge must be passed to employees by the end of the month after which they are received. 

Davies stressed that this is a legal requirement with no flexibility. The rule applies to all tips received, so businesses will no longer be able to hold back a proportion of funds during busier months to supplement quieter parts of the year.

Pizza Pilgrims co-founder Thom Elliot and chef-restaurateur Adam Handling said this was one of the biggest drawbacks of the new legislation. Elliot said: “We had worked to smooth that curve [with our pervious policy] and the team loved it. It’s a shame we can’t continue to do that.”

Handling said the impact would be felt particularly acutely by his team in Cornwall, where the seasonal nature of the business means there are dramatic fluctuations in trade across the year.

UKHospitality’s employment policy advisor, John Guthrie, said the trade body had campaigned against this section of the law. He added: “We’ve consistently made the point this is an unwelcome part [of the legislation] that doesn’t benefit working people and it should come out.”

4 Businesses can still determine how tips are distributed

The new requirements do not prevent businesses from having their own policies for the distribution of tips and service charge, as long as these can be shown to be fair and have the agreement of the majority of employees.

Policies can take into consideration factors such as length of service, role, working hours and performance in determining how funds are distributed among staff. Pizza Pilgrims overhauled its policy in April and introduced a distribution scheme based upon length of service, which Eliot said rewarded loyalty and recognised those who were fantastic at their jobs but not seeking promotion.

Policies need to have the backing of employees, which Davies stressed does not mean unanimous support. He explained: “If most of team agree [with the policy] most of the time, that’s about as good as you’re ever going to get. There will always be some people who don’t [agree].”

While it may be difficult to get unanimous support from employees, Davies said operators should regularly review policies with their staff and be prepared to evolve them.

5 New rights for agency workers

Davies said that the rights given to agency workers in the act are complex and need attention. Agency workers can no longer be denied a share of tips, gratuities and service charge, but factors such as pay levels and roles in the business can be considered when determining the proportion of funds they should receive. Davies stressed that the onus will be on employers to justify that their policy is fair.

6 Tips must be distributed in the site they were received

Under the new legislation, employers cannot distribute money received in one site among employees working in other sites. This will effectively put an end to the practice of sharing out tips across multiple sites to ensure staff receive equal amounts.

There is an exception: to allow offsite workers, such as those who work in a central production facility or head office, to receive a proportion of funds.

Davies also reassured attendees of the summit that a hotel would be considered a single-site business and funds could be shared among different outlets within it.

7 Policies and records must be available to employees

Policies for the distribution of tips and service charge need to be written and shared with employees. Davies stressed that the sharing of policies was a “proactive obligation”, and that making them available on request would not be seen as adequate.

Records of tips received and distributed also need to be kept and provided to staff within 28 days of a request being made.

Employees have a right to know how the amount of tips they received was calculated and the factors taken into consideration, but do not have a right to see what colleagues have received.

For Handling and Elliot, effective communication has been essential when implementing the changes. Elliot said: “It’s important to fill that information void with real clarity about what you’re doing. If not, it’ll be filled with ‘oh, we’ll get way more’ and other Chinese whispers that are not helpful.”

Handling said he had made it clear to his team members that they could speak to the business’s external troncmaster at any time as a means of demonstrating transparency.

8 Enforcement will be through employees and public jury

There will be no inspection teams from HM Revenue and Customs checking that businesses are complying with the new legislation, but employees will have the right to request records from their employer and raise grievances.

Concerns should initially be raised with the employer. If these are not resolved adequately, employees will be told to contact Acas to mediate and, if no settlement is reached, the case would go to an employment tribunal. If an operator is found to be in breach of legislation at tribunal, they could be fined up to £5,000 per worker.

Guthrie also stressed that word of mouth and social media could cause huge reputational damage if a company is found to be flouting the rules.

9 Further change is ahead

The Labour government has said it plans to add further legislation to the bill and Guthrie and Davies both stressed that operators should expect this to be brought forward quickly.

Guthrie predicted new rules strengthening employees’ rights to determine how tips are distributed could be tabled as early as next week.

Davies added: “I think it will require a more formal process to get that broad agreement from teams. So, a business will not be able to assume or gerrymander agreement, it will have to be a process that shows most people are supportive of what the policy is.”

Find out more about The Caterer’s Summits

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