New Employment Bill in UK ensures transparency in tips for all workers

Queen Elizabeth II, in her address to the UK Parliament on October 14, announced the steps the government will take to ‘make work fairer’ by ‘introducing measures that will support those working hard’. The measures were in reference to the Employment (Allocation of Tips) Bill, aimed at creating legal obligations on employers to pass on all tips to workers in full. In case the tips will be distributed among the workers, the bill will ensure that they do so in a fair and transparent manner.

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Legal obligations on employers

There will be legal obligations on the employers to pass on all tips, gratuities and service charges to workers and that too without any deduction. The Parliament will formulate a statutory code of practice which will set out the principles of fair and transparent distribution of tips. The Bill has been long-awaited as some of the employers do not pass on the tips to their employees. The legislation would extend to England, Wales and Scotland. 

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Government consultation on tipping, gratuities, cover and service charges

In 2016, the Department for Business Innovation and Skills held a government consultation on tipping, gratuities, cover and service charges. The consultation was focused on the hospitality sector and other sectors such as gambling, betting, hairdressing and taxi operators. The objectives and proposed options within the consultation looked to build on submitted suggestions during the Call for Evidence. There was a broad agreement that Government intervention was required to improve the treatment and transparency of discretionary payments for service. 

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Proposals to ensure transparency

There has been an increasing practice of card payment for the service as well which is controlled by employers. The government had proposed three options for ensuring transparency.  The government proposed to ensure transparency to consumers that discretionary payment for service is just that – ‘discretionary’. The government also wanted to ensure that workers receive a fair share from discretionary payments for service. The last option was to increase transparency for consumers and workers regarding the treatment of discretionary payments for service. 

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