A new law has been implemented in England, Scotland, and Wales, requiring that all tips received by service workers—whether in cash or by card—must be passed on to employees without any deductions.
This legislation, which came into effect on Tuesday, is set to benefit over three million service workers, particularly those in industries such as restaurants, cafes, bars, pubs, hairdressing, and taxi driving.
Under this law, companies that fail to distribute tips appropriately could face claims from employees in an employment tribunal.
All tips must be distributed to staff by the end of the month following their receipt.
While workers will still be required to pay tax on their tips, this new measure aims to provide greater transparency and protection for low-income earners in the service sector.
Tom William, who previously worked in a restaurant chain, expressed his support for the law, highlighting how he was once required to forfeit 3% of his tips to his employer, regardless of whether he received any tips from customers.
He stated, “I’m delighted about the new law because it gives people on the lowest forms of income and shift work a level of protection.”
Bryan Simpson, a hospitality organiser for the union Unite, also praised the legislation, emphasizing that it will greatly benefit some of the lowest-paid workers in the British economy.
Nisha Katona, owner of Mowgli Street Foods, acknowledged the necessity of the law but cautioned that some businesses might struggle to adapt to the changes.
While many establishments already have systems in place to share tips fairly, there are concerns about how the law will be enforced.
For example, at Fish’o’licious in Great Yarmouth, waitress Dory Czicza noted that tips are pooled and shared among staff, while fryer Tom Howes indicated that he receives a different form of compensation.
Emma Webb from The Kitchen in Ilminster shared that her business already follows a system that ensures fair distribution of tips.
Tom Moyes, a partner at Blacks Solicitors, explained that the aim of the law is to create transparency in how tips are allocated.
Workers can now request a breakdown of tip distribution every three months.
However, questions remain about what constitutes “fairness” in tip sharing, particularly regarding whether senior staff should receive a greater share compared to junior employees.
Importantly, this new law does not apply in Northern Ireland, which has sparked criticism from union representatives.
The Northern Ireland executive is currently drafting a workers’ rights bill based on feedback from a recent consultation that closed on Monday, and it has indicated that tips distribution will be considered in this legislative process.
Tipping customs in the UK vary by location and context.
Visit London recommends a customary tip of 10-15% for restaurant dining, while taxi drivers are typically tipped 10-15%. However, tipping in bars and pubs is generally not expected.
Kate Nicholls, chief executive of UK Hospitality, noted that tipping practices in the UK are less rigid compared to other countries, like the US, where tipping is often mandatory regardless of service quality.
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