Did you know that whenever hospitality customers leave a tip using their card, the business has discretion over the recipient of that tip, meaning that the money doesn’t always go to those that it’s intended for?
Given that 80% of tips in the UK are now paid by card, the reality is that a lot of hospitality staff are missing out on a large chunk of tips.
Concerns about the treatment of tips have grown steadily in recent years, so much so that the government has now passed a law overhauling tipping practices. Known as The Tipping Bill, passed earlier this month, the law is set to benefit more than 2 million Brits working in the hospitality industry.
What is the new Tipping Bill?
The Tipping Bill is a new law that aims to ensure that all tips paid in bars, restaurants and other hospitality venues go to staff. In the government’s own words: “This Bill makes it unlawful for businesses to hold back service charges from their employees, ensuring staff receive the tips they have earned.”
The Bill was passed on 2nd May, with the measures expected to come into force in 2024 following a period of consultation and secondary legislation.
Any tips received by staff will not be included as regular pay, nor will they be subject to statutory tax or National Insurance deductions.
Under the new directive, agency workers will also be entitled to a share of tips on the same basis as directly employed staff and employers can expect a fine should they withhold tips from their staff or fail to distribute them fairly.
With the new legislation in place, hospitality staff can have confidence that the tips they receive will be rightfully theirs, which may improve job satisfaction and act as an incentive for improved levels of service.
Wages in the hospitality sector are renowned for being low, with service staff often reliant on tips for paying their bills. This is especially true in the current financial climate, and so the possibility of earning more may lead workers to go above and beyond in their jobs.
The good news for customers is that, once the bill comes into effect, they can be sure that any tips they leave end up in the right hands. Previously, customers may have been led to believe that their tips were being paid to their server when, in reality, they were being split or even sent to the employer.
The new legislation requires businesses to clearly display their tipping policy, ensuring customers are aware of how tips are distributed among staff.
Improved industry standards
To comply with the new bill, businesses will have to provide staff with a written copy of their tipping policy and maintain accurate records of the tips they receive. These tasks are likely to be seen as an added administrative burden, but they have the potential to raise industry standards as a whole.
Fairer and more transparent tipping practices should help to improve employee morale and productivity, as well as reduce turnover – all playing a role in helping to reduce the staffing shortage crisis that the industry is facing.
The Tipping Bill: a win for all
For service staff and the vast majority of employers that already operate fair tipping practices, the new legislation is a long time in the making.
And although it may seem like a setback for some businesses, the long-term outlook is in an industry with improved transparency and a happier workforce.
What do you think of the new Tipping Bill? We’d love to hear your thoughts on our social media channels. And if you’re interested in hiring a rental kitchen space for food photography or recipe development, drop us a message!