Employers could be taken to tribunal over withheld tips under government proposal

Hospitality firms urged to start planning how to divide service charges fairly, with experts saying transparency is key.

Employers in the hospitality sector will be legally required to pass tips on to their staff and could face tribunal claims if they fail to do so, under new rules outlined by the government.

The government has said the changes will help around two million hospitality workers, many of whom earn minimum wage and rely on tips to top up their income.

Under the new rules, employees will be able to request information relating to their employer’s tipping record, and will be allowed to bring forward an employment tribunal claim if their employer is suspected of breaking the rules.

The employment tribunal would have the power to fine any employer found to be breaking the new rule, in addition to requiring the employer to compensate workers for any lost tips.

At the moment, businesses are able to choose whether to pass tips on to workers or keep them. However, the government has said it is acting over concerns that the move towards a more cashless society has made it easier for employers to withhold tips.

Four in five tips are now made through card payments, as opposed to cash given directly to the serving staff, which the government said had “accelerated dodgy tipping practices” by employers.

The government has not specified when these measures will be coming into force.

The changes were likely to improve motivation and retention, however, issues may arise over employees not believing that tips are being shared fairly. As such, it’s beneficial for employers to have a clear plan in place, which can be communicated to their teams, to minimise any resistance or grievances.

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