New legislation is being introduced to protect hospitality workers. Tips that are paid by card will legally have to be paid to the staff. This puts all forms of tips on the same level of legal protection as cash tips have been protected in this way for some time. It has been revealed in recent years that some employers were using card tips to pay chefs’ wages or were kept as profits. Other companies were retaining tips due to “processing fees”.
This law has been promised since 2016 although the COVID 19 pandemic has hastened its introduction. Since many businesses have been introducing cashless policies it has been suggested that over 80% of tipping now happens by card. These new protections are estimated to assist over 2 million workers.
The legislation will make it illegal for employers to make any deductions to tips whatsoever. A Statutory Code of Practice will also be issued which will explain how to fairly and transparently allocate tips. Additionally, employees will now have the right to make a tribunal claim based on the withholding of tips. To assist with this, employees will be able to access the tipping records of their employments as part of a claim.
It is already recommended that accurate tipping records are kept by employers for the purposes of HMRC and the Self-Assessment tax return. However, now this will be even more essential. Employers would also be advised to put in place a tipping policy that explains exactly how tips are distributed. The legislation is not likely to be in force until late 2022 at the earliest so there is plenty of time for employers to prepare.
If you have any questions on any of the issues mentioned in the above article, please contact Natalia Milne.