Calling all bars and restaurants – more legislative change on the way!! TIPPING AND BAR STAFF/WAITER/WAITRESS RIGHTS

I am often asked by my wonderful clients when there is confusion about what to do with employees tips when payment is by credit card. Well the answers I give will be changing very soon. Here’s why.

The Employment (Allocation of Tips) Bill 2023 is now making its way through Parliament and will amend the Employment Rights Act 1996 to insert new legal obligations on bar and restaurant employers.

These would require employers to ensure that all tips, gratuities and service charges they receive or exercise control over must be paid to workers in full without deductions and by the end of the following month. It would also introduce obligations to ensure the fairness of arrangements to distribute those tips among workers, either when distributed by the employer or via an independent tronc. Under the Bill, the Secretary of State would be able to introduce a new code of practice about the fair and transparent distribution of qualifying tips, gratuities and service charges which would help to indicate what would count as a fair distribution for the purposes of the new legal obligations.

These provisions would apply both to those working directly for hospitality businesses and to agency workers supplied to work in those businesses.

This is a long overdue measure and has been in the pipeline since 2015 when the Pizza Express and Wahaca stories first broke about how they allocated tips paid to employees. Now, about 2 million people are affected and as over 80% of payments in bars and restaurants are via credit or debit cards the issue has arisen to the top of the Parliamentary agenda and the Bill which will amend the Employment Rights Act 1996 has all party support so this will become law.

A code of practice will be produced as to how bar and restaurant owners will be required to split up and redistribute the tips between staff.

I am advising several clients on this tricky issue and how to get ready for the reforms so do please give me a call at Keystone Law and please feel free to re-post this.