Last September we reported on the Government's call for evidence on various issues related to tipping in the hospitality and other sectors. That evidence has now been gathered and considered, and the Government has just proposed measures to address the concerns which have been identified:-
- a lack of transparency as to the discretionary nature of tips, and as to the manner in which any tips offered were being distributed (96% of consumers were either never or only sometimes aware of who gets any tips)
- suggestions that some employers make inappropriate or excessive deductions from tips when handling them for employees
- low awareness of the current voluntary code of practice on tipping
The Government has confirmed it will:-
- take action to ensure the discretionary nature of tips is made clear, and potentially, stop businesses from proposing any specific amount or rate for a tip
- guarantee that employees receive a fair share of any tips offered – this may include a ban on employers imposing admin charges when dealing with tips. The Government has stated plainly that it "believes that all discretionary payments for service, after tax where appropriate, should be received by the worker; or managed separately from the employer through a tronc system."
- update and/or make statutory the current code of practice on tipping
The precise manner in which the above steps will be implemented is now the subject of a formal consultation - submissions may be made up until 27 June. I am co-chairing the Employment Lawyers Association response to the consultation – considering the proposed measures from a legal perspective. But for many employers in sectors in which tipping is prevalent, their concern will be the potential cost and indeed disruption to their business associated with the new rules. They may already be struggling with the introduction of the national living wage while also contemplating the forthcoming apprenticeship levy. These changes could involve further significant costs - not least, the potential ban on restaurants suggesting a specific tip (or including it as a matter of practice when preparing the bill) could have a huge impact on how many tips are actually offered.