Good Work Plan ... Crackdown on poor tipping practices
08 May 2019
- Despite having consulted In May 2016 on proposals to stamp out employers retaining a proportion of staff tips, no new legislation was introduced at that time
- In October 2018, Government detailed its intention to address the unfairness of employers keeping a proportion of tips that were intended for staff and this was confirmed in the publication of the Good Work Plan in December 2018, in its response to the Taylor review.
In 2009 Government developed a Code of Best Practice on Service charges, Tips, Gratuities and Cover Charges with trade unions, business representatives and consumer groups. It is a voluntary code and explains how employers should handle tips and gratuities. This coincided with a change in the National Minimum Wage Regulations (NMW) to prevent the payment of tips and gratuities being counted toward NMW pay. However, employers still had no legal obligation to pass on all tips to workers and so, unscrupulous employers continued to retain some of the tips intended for their staff.
If an employee's basic pay is at the NMW level, any tips paid through the employer's payroll must be paid in addition to the employee's basic pay. Employers which use a service charge, tip, gratuity or cover charge to make up the national minimum wage (NMW) could be handed significant financial penalties as part of HMRC’s naming and shaming of NMW offender’s initiative.
As a component of the Good Work Plan Government is now looking to introduce further legislation to ensure that all tips are passed directly to the individual.
If you would like help in producing a Policy on Tipping or advice in relation to the National Minimum Wage, do get in touch. We will provide an update once the legislation is published.
We will be providing Good Work Plan updates on a quarterly basis so watch this space…..