Legislation to combat tip theft is finally here

In theory, hospitality workers' earnings should now be protected – but workers are encouraging further action

Hero image in post
photo: Micheil Dot Com on Unsplash
Hero image in post
photo: Micheil Dot Com on Unsplash

In theory, hospitality workers' earnings should now be protected – but workers are encouraging further action

By Polly Smythe24 Aug 2022
5 mins read time
5 mins read time

In the six years since the government signalled the introduction of legislation on tipping, an astounding amount of money destined for the pockets of hard-working staff has been lost. Now, the introduction of the Employment (Allocation of Tips) Bill, which the government claims will benefit over two million hospitality workers, would make it illegal for employers to withhold tips from staff. But trade unions are asking whether it goes far enough to stop workers getting short changed.

In 2015, high street chains like Pizza Express, Côte, and Bills were accused of routinely keeping tips to top up wages or charging ‘administrative costs’ on the processing of tips made on card payments. While the companies denied wrongdoing, the backlash promoted a Government review on the existing tipping policy. In 2016, then-business secretary Sajid Javid announced proposals to tighten up the existing code of conduct, but signalled a willingness to legislate on the issue if employers refused to comply.

Missed opportunities for government intervention

At the 2018 Conservative Party Conference, the Government announced its intention to introduce legislation around protecting tips. Eventually, those measures were folded into the elusive Employment Bill, first proposed in the December 2019 Queen’s Speech. The bill, which failed to appear in either the 2021 or 2022 Queen’s Speeches, has still yet to materialise.

During the pandemic, the issue of tipping came under increased scrutiny, in part due to the mass closure of hospitality venues. While chancellor Rishi Sunak claimed that furlough would cover 80 per cent of wages, guidelines instead stated, “You cannot include the following when calculating wages: any tips, including those distributed through troncs.” Troncs are a pay arrangement used to distribute tips, gratuities, and service charges to employees, instead of a system of staff earning individual tips.

Following on from the pandemic, 80 per cent of tips now happen on card, meaning there’s less transparency around where tips are ending up, in turn making workers even more exposed to tip theft.

“These are important steps forward that Unite Hospitality have been calling for for years.”

Finally, a breakthrough – but does it go far enough?

While it looked as though tipping was off the table, in June, the Conservative MP for Watford Dean Russel introduced a private members’ bill on tips. Not only does the Employment (Allocation of Tips) Bill create a legal obligation to allocate tips without deductions, it also introduces obligations on employers to ensure that tips are fairly distributed among workers. Additionally, it gives employees the right to request an employer’s tipping record, so that they can bring them to an employment tribunal. These new provisions would apply to those directly employed, as well as to agency staff.

For Caitlin Lee, chair of Unite’s Glasgow Hospitality branch, “These are important steps forward that Unite Hospitality have been calling for for years.” Since Covid-19, Lee has witnessed “the disparities in tipping policies become more apparent.” Unite have entered into multiple disputes around this issue, most prominently in their year-long battle against Pizza Express, which saw the company reverse its decision to cut tips for waiting staff from 70% to 50%.

That’s because, while Lee recognises that legislation is important, she’s aware “unscrupulous employers will still attempt to cut the fair share to all staff.” Instead, “that the best way to hold your employer accountable is through Unite Hospitality and unionising with your colleagues.”

It’s a sentiment echoed by Liz*, who works at a bar chain in South London. “Companies get all the pressure off their back by releasing these regulations, and then leave it up to the individual managers to actually practice them.” She added “It’s all reliant on the individual, to enact and enforce it.”

While withholding tips or relying on them to subsidise wages are the most routine way restaurants pocket staff tips, they’re not the only exploitative practices. Employers can deduct breakages or customers leaving without paying from staff tips, pay staff using only money made from tips, or include highly paid salaried staff in pay outs.

“As soon as Covid hit, the reduction in tips was really drastic.”

Collective action is necessary

For Susie*, who works for an American style chain in Wales, “now people don’t really carry cash, they can’t just chuck you the £1 or £2 that was lying about in their purse.”

“As soon as Covid hit,” Susie explains, “the reduction in tips was really drastic.”

For any proposal to be successful in redressing tip theft, Lee believes it needs to engage workers and be led by them. “We believe a tronc master, who is elected by the workforce, would ensure full transparency in tips. This would be best practice, and it’s something we would push for across all hospitality venues.”

In a statement, the Unite national officer for hospitality, Dave Turnbull said: “it has been the pressure of the workers that has brought even this first step towards change. Sadly, at this stage we are not confident that these measures will address the problems with tipping practices across the hospitality sector.”

As the cost-of-living scandal requires businesses to spend more on energy and food, the threat of tip manipulation is even greater. As such, intervention is arguably more necessary now than ever, if the mainly young workforce who have been left wide open to abuse for years are going to be protected.

You can learn more about unionisation in the hospitality sector at the official website of Unite Hospitality