The Employment (Allocation of Tips) Bill will amend the Employment Rights Act 1996 to require employers to ensure that all tips, gratuities and service charges they receive or exercise control over must be paid to workers in full without deductions and by the end of the following month.
It would also enable the Government to create a code of practice intended to ensure fairness and transparency in how the money is allocated amongst staff, and introduce an enforcement mechanism for employees to make complaints and seek redress.
Having passed its third and final reading in the House of Lords on Friday (20 January), the bill, which was first brought forward by Russell back in the summer of 2021 and has been fronted by Conservative MPs Virginia Crosbie and Dean Russell, now waits for the final stage of Royal Assent when it will become an Act of Parliament.
Addressing peers on Friday, Conservative former minister Lord Robathan, who sponsored the Bill in the upper house, said: “Most businesses already allocate tips fairly to their staff but regrettably a minority have not done so.
“This gives the staff, often among the least well-paid in hospitality, waiters for instance and others … it gives them the opportunity to insist they are given the service charge which many of us in restaurants pay whenever we go to a restaurant, and they get the tips rather than it going into the profits of perhaps a big company.
“This does not happen that much, but it does happen a bit, and we need to make sure it does not happen at all.”
The Government also gave its backing to the plans.
Addressing peers, Business Minister Lord Johnson of Lainston said: “Bringing forward this new law will protect millions of workers, among them many of the lowest paid and give them an avenue to seek remedies.
“Consumers will rest assured the tips they leave are going as intended to reward the good service and hard work of staff, rather than boosting the revenue of businesses.”
This is the latest stage in a long-running saga to introduce more robust tipping laws that stretches back to 2015 when a Government consultation found restaurant customers were overwhelmingly in favour of the tips they paid going to the people who served them.
The Conservatives previously committed to tackling the issue of the unfair distribution of tips in its 2019 manifesto.
In September 2021 the Government announced plans to overhaul tipping practices and make it illegal for employers to withhold tips and service charge payments from workers.
However, that legislation was subsequently shelved.
Last year Labour also pledged to 'stamp out' unfair tip deductions, claiming that hospitality and leisure workers are missing out on around £200m a year.
A date for Royal Assent for the Employment (Allocation of Tips) Bill has yet to be scheduled.