Where do your tips go?

Many of us will have experienced good and bad service in restaurants or hotels and wondered who actually received the service charges added to bills. Was it the grumpy individual who ignored our attempts to request a bill or was it the waiter with the engaging smile who very definitely deserved his fair share of the tip paid with our bill.

Also, the days of leaving a cash tip for a table waiter seem long gone, eclipsed by the facility to pay by card or Apple Pay.

Which begs the question, who does receive our tips?

This question may be a step closer to being answered as the long awaited implementation of the Employment (Allocation of tips) Act 2023 is approaching completion. In a recent press release issued 22 April 2024, the Department for Business and Trade said:

“Millions of UK workers are set to take home an estimated £200 million more of their hard-earned cash, as landmark legislation on tipping took a step towards coming into force.

“Today, Government introduced the Code of Practice on the fair and transparent distribution of tips that will have legal effect under the Employment (Allocation of Tips) Act 2023.

“The updated Code of Practice will be statutory and have legal effect, meaning it can be introduced as evidence in an employment tribunal.”

But will this legislation actually ensure that employees receive the tips paid by customers as a reward for the service? Apparently, yes it will; the announcement continues:

“The Act and secondary legislation make it unlawful for businesses to hold back service charges from their employees, ensuring staff receive all of the tips they have earned. The measures are expected to come into force on 1st October 2024, once they have been approved by Parliament.

“Alongside the updated Code of Practice, we have also published the formal Government response to the public consultation which sets out the feedback received during the consultation, the Government’s response and next steps.

“Many hospitality workers rely on tips to top up their pay and are often left powerless if businesses don’t pass on service charges from customers to their staff.

“This overhaul of tipping practices is set to benefit more than 2 million UK workers across the hospitality, leisure and services sectors helping to ease cost of living pressures and give them peace of mind that they will keep their hard-earned money.”

It will be interesting to see how affected employers will implement these changes. The details of the draft code or practice can be accessed here: https://www.gov.uk/government/consultations/distributing-tips-fairly-draft-statutory-code-of-practice

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