UK government shelves plans to help hospitality workers keep tips

Plans to ban withholding money from staff who have been tipped by customers are being dropped | Photo credit: Clay Banks

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It had been expected that the Queen's Speech, which marks the beginning of each parliamentary year in the UK, would contain more detailed plans to make it illegal for employers to withhold tips from hospitality workers.

Research shows that many businesses that add a discretionary service charge onto customer’s bills are keeping part or all of these service charges, instead of passing them onto staff. This practice has accelerated as the UK shifts towards a cashless society, with 80% of tipping now taking place on cards, according to the UK government.

In September 2021, UK Business Minister Paul Scully announced that government plans would make the practice of withholding money from hardworking staff who have been tipped by customers illegal. The legislation would have also laid out a statutory code of practice setting out how tips should be distributed to ensure fairness and transparency.

At the time, the Department for Business, Energy and Industrial Strategy said that the move would benefit approximately two million people working in one of the 190,000 businesses across the hospitality, leisure and services sectors.

According to a report in the Financial Times, the planned legislation has been dropped from the Queen’s Speech, which will take place on 10 May.

The Unite union and Trades Union Congress have both argued that hospitality workers face losing thousands of pounds a year from their earnings when an employer declines to hand over their tips.

The government move comes as many hospitality businesses struggle to attract skilled workers following the pandemic and the curtailment of European labour after Brexit. Costa Coffee, Pret A Manger and EG Group, which owns the Leon coffee and fast-food chain, have all announced significant investments to boost worker pay in a bid to fill vacant roles and retain staff.