Government commits to banning employer tip deductions

The government committed to deliver new legislation to ban employer deductions from tips in today’s Queen’s Speech.

The Queen told the House of Commons today: “My government will take steps to make work fairer, introducing measures that will support those working hard [Employment (Allocation of Tips) Bill].”

The announcement comes more than three years after a consultation into tips, service charges and troncs was led by then business secretary Sajid Javid; and 12 months after the Prime Minister’s predecessor Theresa May said a ban on employers making any deductions would be introduced at “the earliest opportunity”.

Any moves to legislate have long been opposed by industry body UKHospitality. CEO Kate Nicholls said: “We already have a clear, transparent and fair voluntary code of practice regarding the collection and sharing of tips. The code makes it clear to businesses, employees and customers how tips can be fairly shared so that all team members get what they deserve and customers can be confident that the money they tip is going to the correct place.

“Deductions are sometimes made to service charges as hospitality businesses are charged by banks in order to process payments. If the full amount is to be passed on, then hospitality businesses are going to be forced to foot the bill. If there is a new legal obligation to pass on the full amount of a service charge, then there needs to be action to ensure that hospitality, a sector that provides over 3.2 million jobs around the UK, is not stuck with yet another tax. That may mean measures to cap or remove charges to hospitality businesses altogether.”

Despite rhetoric from previous governments suggesting “tough” legislation, the industry continues to await details of how new laws would be implemented and earlier this year it had appeared plans may have been kicked into the long grass.

Javid's original review into tips, service charge and tronc was prompted by a series of negative headlines in the press, often involving casual dining groups, running back to late 2015.