Moves towards a cashless society have accelerated dodgy tipping practices

To tip or not to tip? Card or cash? And how do you kow the right amount goes to the right person? The government has today announced new plans to overhaul tipping practices which they say will ensure all tips go to staff, providing a financial boost to hospitality workers.

It's shocking that this group of mainly young workers has had to wait five years for government action

Most hospitality workers – many of whom are earning the National Minimum Wage or National Living Wage – rely on tipping to top up their income. But research shows that many businesses that add a discretionary service charge onto customer’s bills are keeping part or all of these service charges, instead of passing them onto staff.

Castle Street Liverpool Restaurants Tipping Changes Laws Photo Vma
The government says the move will be a boost for the hospitality industry VMA

Employers no longer able to withhold tips from staff

The government has now announced they are going to make it illegal for employers to withhold tips from workers.

Paul Scully, Labour Markets Minister said, “Unfortunately, some companies choose to withhold cash from hardworking staff who have been tipped by customers as a reward for good service.

“Our plans will make this illegal and ensure tips will go to those who worked for it. This will provide a boost to workers in pubs, cafes and restaurants across the country, while reassuring customers their money is going to those who deserve it.”

Tip Jar Tad Hannah Pixabay
Many hospitality workers rely on tips to boost their income Tad Hannah

Has move to cashless damaged tipping?

Moves towards a cashless society have accelerated dodgy tipping practices, as an increase in card payments has made it easier for businesses to keep the funds. 80% of all UK tipping now happens by card, rather than cash going straight into the pockets of staff, according to the government. 

Businesses who receive tips by card currently have the choice of whether to keep it or pass it on to workers. The new legislation aims to create consistency for those being tipped by cash or card while ensuring that businesses who already pass on tips fairly aren’t penalised.

The legislation will include a requirement for all employers to pass on tips to workers without any deductions, as well as new rights for workers to make a request for information relating to an employer’s tipping record, enabling them to bring forward a credible claim to an employment tribunal.

Too late?

Unite - the largest union for hospitality workers - criticised the five-year delay in the government coming forward with tips legislation, which it said has cost the UK’s waiting staff an estimated £10,000 in "lost" tips.

Unite general secretary Sharon Graham said: “It's shocking that this group of mainly young workers has had to wait five years for government action to tackle the tips scandal. We will continue to challenge abuses in the workplace and Unite will keep fighting to improve the jobs, pay and conditions of the hospitality workforce.”

Unite said based on a survey of its Pizza Express members, waiting staff were losing £2,000-a-year in "lost tips" or an estimated £10,000 since the government’s 2016 announcement to clamp down on unfair tipping practices.

Kate Nicholls Ceo Ukhospitality
Kate Nicholls, CEO of UKHospitality

Kate Nicholls, CEO of UKHospitality, urged the Government to continue to work closely with the sector as it introduces the legislation.

“Ensuring employees receive the tips they earn will further strengthen the sector’s ability to create jobs and support the wider economic recovery,” she said.

“For hospitality businesses, though, customers tipping with a card incurs bank charges for the business, and many also employ external partners to ensure tips are fairly distributed among staff.”

Any hospitality worker will tell you that tipping systems vary massively from restaurant to restaurant. Legislation like this is welcome, of course, but how about we pay hospitality staff a decent wage? Then we could just forget about the antiquated custom of "tipping" altogether.

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