The recent announcement regarding the government’s plans for workers to receive the tips given to them has created much debate. While most employers do act in good faith, there are many who follow poor tipping practices. There are excessive deductions in the tips left by customers by the time it reaches the pocket of workers. Once the new legislation comes into practice, it will ensure that the tips will go to workers who provided for the concerned service.
There has been no timescale given to bring the rule in to process, which means it needs to be done at the earliest. Ever since the Brexit vote and closing of consultation into tips and service charges, the proposal has taken two years to come to the fore.
The simple and fair idea that a customer rewards good service by giving the amount directly to the person who has provided the service has become unnecessarily complex. It was easier when the bills of restaurants were settled in cash and any excess amount given by customer over and above the restaurant charge went to the waiter or waitress who served you. Sometimes, these tips were divided among the kitchen and waiting staff in a pre-decided ratio. The introduction of credit and debit card payments complicated the tipping system.
What is a tip?
A tip is paid upon the understanding that it shall be distributed among the staff. The employer cannot use these tips for any other purpose other than what it is given for. If this is the case it can be recovered by the customer as money received, as the employer has failed to carry out his duty as an agent of these tips.
The amount of money which is paid by cheque or card are the payments made by employers to employees. Obviously this money becomes the property of employer and it is thereafter his duty to pay an equivalent amount to service staff. The money is paid to the employer by the customer with the understanding that they will pass it on to the employees and that tips, earned either by cheque or card will not be counted as minimum remuneration.
When the employer fails in his duty, the tip being contributed to reward a good service, is in fact only contributing to the employer’s obligation to pay a minimum wage. This unappealing and very unfair treatment of tips has been a matter of concern among the waiting staff for decades. There have been a myriad of regulations introduced in this regard including an amendment to National Minimum Wage Regulation from 1st October 2009.
BIS also issue a voluntary code of practice regarding service charges, tips, gratuities and cover charges. This has encouraged quite a lot of transparency in this regard which was not happily welcomed considering the public understanding and confusion over tips.
At the end of consultation process, the government has announced that it was in consideration whether the code should become the basis of the proposed legislation by being put on a statutory footing. All we can do for now is to wait and see what happens but in the meantime the ideal way to ensure that your workers, waiters and waitresses get their due tip is to follow the traditional way, to pay the whole bill or at least the tips in cash and declining to pay any optional or additional service charges and hidden charges.
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Tom Street qualified as a solicitor in 2003 and has over 20 years experience in employment and litigation law. He studied law at the University of Manchester before undertaking the legal practice course at the College of Law in Guildford, going on to complete his legal training at a firm in Chancery Lane, London. Once fully qualified, he moved to a niche litigation practice in the City of London.
In 2010, Tom set up his own legal practice, Tom Street & Co Solicitors and as part of this, in accordance with his strongly held objective to provide everyone with an easy pathway to justice he established the online portals Do I Have A Case? and Tribunal Claim. These websites are trading names of Tom Street & Co Solicitors.