In a significant shift for service industry workers, a new law requiring all tips from customers to be passed on to employees has come into effect today in England, Scotland, and Wales.
This legislation aims to protect over three million service workers, ensuring they receive the full value of their tips, whether given in cash or via card.
Under the new regulations, businesses are prohibited from withholding any portion of tips from employees. Any violation will allow workers to lodge claims with an employment tribunal.
The law, which applies across various industries, is expected to have the most substantial impact on those working in restaurants, cafes, bars, pubs, hairdressing, and taxi services.
All tips must be distributed to workers by the end of the following month from when they were received.
Although workers will still be required to pay taxes on their tips, as per previous regulations, advocates for the change see it as a vital step towards fairness and transparency in the treatment of low-paid workers.
Tom William, a former chain restaurant employee now working in property development, expressed his delight at the new law, emphasizing the protection it provides to individuals on lower incomes and in shift work.
“What happened in my experience was that they said, ‘If you don’t hand over your 3%, then we won’t employ you anymore,’” he recalled, highlighting the pressure placed on workers to surrender a portion of their earnings.
Bryan Simpson, hospitality organiser for the Unite union, also welcomed the law, stating, “These are the lowest-paid workers in the British economy, and they are going to benefit massively from this.”
Nisha Katona, owner of Mowgli Street Foods, echoed this sentiment, noting the need for protections against employers who might seek to withhold tips from their staff.
However, she cautioned that some businesses may struggle to adapt to the new regulations, suggesting that “there are going to be some casualties because of this law.”
The practical implementation of the law has raised questions regarding its efficacy and fairness.
Tom Moyes, a partner at Blacks Solicitors, explained that while the goal is to promote transparency around tip distribution, the lack of clear guidelines regarding who should receive what share of the tips could lead to disputes.
Staff can now request a breakdown of tip distribution every three months, but the specifics of what constitutes “fairness” in tip sharing remain ambiguous.
The law does not extend to Northern Ireland, a situation that Unite has described as “completely unacceptable.” The Northern Ireland executive is currently drafting a workers’ rights bill, taking into account proposals from a recent three-month consultation.
While tipping customs in the UK can vary significantly, VisitLondon advises customers that a tip of 10-15% is customary when dining out. Tipping for taxi services typically ranges from rounding up to the nearest pound to an additional 10-15%.
However, trade body UK Hospitality’s chief executive, Kate Nicholls, asserts that tipping remains a matter of personal discretion in the UK, unlike in countries such as the US, where tipping is more rigidly expected.
As the new law comes into effect, its impact on service workers and businesses alike will be closely monitored, with hopes that it will foster a more equitable environment in the service industry.
