Employers in the hospitality sector are being told to prepare for upcoming reforms to tipping practices proposed by the government last September – a development that accountants are advised to be aware of.
Minister for Small Business, Paul Scully, said the government will bring forward the legislation requiring businesses to pass all tips to workers “as soon as parliamentary time allows” and expects the new rules to kick in no earlier than one year after legislation has passed.
Reform aims to ensure tips are distributed fairly
Scully said: “This legislation will require employers to pass on all tips, gratuities, and service charges to workers without any deductions. Employers will be required to distribute tips in a fair and transparent manner, where employers have control or significant influence over tip distribution.
“We will introduce a new right for workers to make a request for information relating to an employer’s tipping record, to enable them to bring forward a credible claim to an employment tribunal.”
Francis Keepfer, a solicitor specialising in employment law at Pinsent Masons, said: “Employers need to be thinking about this now. The legislation being proposed is, effectively, that all discretionary service charges will go to workers so employers will no longer be able to get any of that money, save for tax deductions.”
Firms required to maintain written record for transparency
He said the new rules will make the distribution of tips more transparent: “There’s going to be a new statutory code of practice, which is going to replace the current voluntary code of practice which, to be honest, isn’t really given much regard by employers.
“Employers are also going to be required to have a written policy on tipping. They are also going to have to keep a written record of their tipping practice in their records. They are also going to have to give their workers the right to ask questions and demand information about their tipping records.
“All of those changes are going to require input from employers and [they should] start thinking about that now.”