The Employment (Allocation of Tips) Bill is a Private Members’ Bill sponsored By Dean Russell MP, which was backed by the government at its second reading in Parliament on 15 July 2022, and is now expected to become law.
The Bill intends to overhaul tipping practices so that all tips, gratuities and service charges (“tips”) are distributed fairly amongst staff and paid without deductions.
The new legislation is estimated to affect around 2 million hospitality workers in the UK working in pubs, cafes and restaurants, often paid minimum wage and for whom tips can make up a large proportion of their income.
Cash tips paid directly to a worker generally become the legal property of that individual (although it remains possible for employers to exercise influence over cash tips under their terms of employment). Payments made by card, however, are paid directly to the employer and become the legal property of the employer.
The Bill’s intention is to prohibit the practice, currently adopted by some businesses, of retaining all or part of tips paid by card instead of passing them on in full to staff.
The government originally announced plans to legislate along these lines several years ago following a Call for Evidence in 2015. At that point in time, evidence revealed that around two thirds of employers in the hospitality...
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