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Tipping Point – what the Queen’s speech means for the hospitality sector

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Tipping Point – what the Queen’s speech means for the hospitality sector

In the recent Queen’s speech the government committed to ensuring that restaurant, hotel and pub staff receive 100% of tips from customers. Elaine Howard in our Employment Team looks at how this may affect the sector

The Employment (Allocation of Tips) Bill outlines how employers will be obligated to distribute tips fairly amongst staff, in accordance with a new code of practice. This appears to be good news for hard working waiting staff, but what are the potential consequences for businesses and employees?

Previously there was no legal obligation to pass the service charge to staff, and some restaurant chains were taking 10% of tips paid by credit and debit card.  This has been reduced voluntarily by many in the hospitality industry under a voluntary code of practice.

The hospitality sector argues that it is necessary to deduct some service charges to cover the costs of processing payments. However, under the new proposed legislation those costs will have to be covered by employers. As a result the hospitality sector has not universally welcomed these measures, as they consider they will place an additional unwanted burden on businesses.

Until the final details of the legislation and the potential additional costs to businesses are known, the hospitality industry remains sceptical. One possible consequence of the legislation is that restaurants will not allow customers to leave tips electronically. Many customers do not carry cash as a matter of course, therefore staff will be deprived of a tip altogether, which is surely not the outcome the government is aiming for.

As yet there is no date for when this legislation will come into force, and the practical effect and impact of the legislation and how it will be implemented remains to be seen.

If you would like more information about this legislation please contact Elaine Howard – click here for Elaine’s contact details

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