Can employers keep your tips

Can my employer keep my tips?

This is a question that’s been voiced a lot recently. There’s been an increase in public outcry ever since it was revealed in 2015 that some employers take up to 10% of the tips their employees are earning. In this post, we outline the government’s current discussions regarding the implementation of new laws to regulate this kind of exploitative practice within the hospitality industry.

How to make sure waiting staff get your tip

Customers can be divided as to how much they should leave in a tip when eating or drinking out. On the other side of the table, waiting staff sometimes go home frustrated at sharing tips with fellow staff that they don’t feel made an effort to earn them. Whether you’re the customer dining or the people providing the waiting service, tips can be a grey area when leaving a bar or restaurant in the UK. As a customer, you’re only obliged to pay service charge if it’s made clear, verbally or by written notice, before the meal. Certain restaurant chains add a compulsory service charge to bills, while others leave it to the discretion of their customers. Some customers may complain when service charge is automatically generated onto the printed bill. They have a right to do so if they were not warned beforehand. However, generally speaking, when service provided is of a high standard, most people are happy to give their waiter or waitress a little extra to reward the high standard - so long as these staff are the ones that receive this money. At the moment, who will see your money depends on the method with which you choose to pay your tips. Cash tips are legally the property of staff. They either go straight to the person serving or are shared out amongst all staff on duty. This varies from restaurant to restaurant and across teams. Whatever is done, the tips aren’t the property of the restaurant/business. Card tips on the other hand do belong to the business. What’s more, the business owner has no legal obligation to give any of these to staff (however most high street chains do). The same applies to service charges added automatically to the bill. Tip: it’s worth asking about this before you accept a job in the hospitality industry!

Exploitative practices in the workplace: tipping abuses

Since it was revealed that many high street restaurant chains were routinely taking up to 10% of the tips paid by debit card, the majority of high street chains have been shamed into stopping this practice. Now the common practice is to take 2.5% and this is simply to cover credit card charges and the cost of processing these payments. Until now however, there have been no laws in place to ensure that staff get a fair share of the tips that they have worked hard to earn. A government lead consultation revealed that customers are overwhelmingly in favour of the tips they pay going to the people who serve them. In response, the government has recently promised to implement tough new legislation that bans employers from taking any deductions from their front of house staff's tips. And this isn’t the only positive news for hospitality workers in the UK recently: the new National Living Wage was introduced in 2016 to be phased in by 2020. Of the workers whose salary it has increased, roughly a quarter of these workers are in the hospitality industry. The aim of the potential new laws currently being discussed, is to regulate employer practice, ensure that workers get to keep all of their tips and also enable customers to leave safe in the knowledge that the tips they give reward the staff they were served by. After all those who choose to leave tips, do so out of a desire to specifically commend the service they receive. Even when service charge is automatically added and they haven’t chosen to pay it, they prefer this to go to the people that provided the service, not the employers.

What about the business owners?

These government discussions form part of the government's intentions to support businesses to create good jobs while making sure the system also works for ordinary people and employees. Employers shouldn’t be allowed to use tips to evade a basic rule of business: charge customers a fair price and pay staff a fair wage. Good employers want to uphold their employees’ rights and reward hard work. After all, it’s this kind of management that makes workers stay with the same employer long-term or encourages them to work for them again and again. When interviewed, some restaurant owners expressed that they were in favour of the proposals because whilst they want to reward good work by their staff, they don’t always have the funds behind their business to raise the hourly pay of staff. Encouraging their customers to give extra to good staff encourages these staff to maintain a high standard of work, at no additional cost to the business. In short, this kind of approach has the potential to benefit both employers and employees. If all goes ahead the new laws will benefit the 1.8 million people currently working in the hospitality industry.

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