New UK law bans restaurants, cafes and pubs from keeping staff tips
Giulia Carbonaro in London
Diners enjoy their drinks as they sit at tables outside a restaurant in London in August 2020. /Tolga Akmen/AFP

Diners enjoy their drinks as they sit at tables outside a restaurant in London in August 2020. /Tolga Akmen/AFP

Restaurant, cafe and pub owners in the UK will be banned by law from keeping customer tips and not passing them on to their employees under new legislation unveiled by the government on Friday.

"This will ensure customers know tips are going in full to workers and not businesses, ensuring workers receive a fair day's pay for a fair day's work," said the UK's Department for Business, Energy & Industrial Strategy.

The ban was first proposed five years ago, but has recently become more urgent after reports of some companies keeping part or all of the discretionary service charge intended to replace tips as card payments disrupted traditional tipping practices.

Cash tips are already legally the property of staff, but the same level of legal protection did not cover tips made by bank card.

Conservative MP and Labor Markets Minister Paul Scully said on Tuesday that, "Unfortunately, some companies choose to withhold cash from hardworking staff who have been tipped by customers as a reward for good service.

"Our plans will make this illegal and ensure tips will go to those who worked for it," he added.

Workers will welcome the new law after the hospitality sector was hit hard by the pandemic. According to the Department for Business, Energy & Industrial Strategy, "the move is set to help around 2 million people working in one of the 190,000 businesses across the hospitality, leisure and services sectors, where tipping is commonplace and can make up a large part of their income."

Breaching of the rule might lead to compensation for the worker and the paying of a fine for bosses, but it relies on employees taking the issue to an employment tribunal.

Under the new legislation, the government also plans to introduce a code of practice, which should set out exactly how tips are to be distributed fairly among staff.

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