Bars and restaurants ‘will be banned from keeping tips meant for staff’

Plans are expected to be announced this week on regulating service fees (Picture: Rex / Getty)

New laws will stop hospitality venues from keeping the tips intended for staff, it has been reported.

There are currently no specific regulations around service in the UK, although cash tips given directly to individual workers legally belong to them. 

Many restaurants now add a discretionary service fee onto the final bill, while the increasing dominance of card payments has seen a rise in non-cash gratuities – but both of these belong to the business by default.

Unless workers agree contracts which say otherwise, it is currently up to managers to decide whether gratuities go straight into staff pay packets or feed into the business’ revenues.

Business Secretary Kwasi Kwarteng is expected to announce plans this week to ensure pub, restaurant and cafe workers are entitled to 100 per cent of the tips on cards.

A Whitehall source told the Mail on Sunday: ‘Workers going above and beyond for their customers can now rest assured that their hard-earned tips will be going directly in their pockets and nobody else’s.

‘We’re putting an end to dodgy tipping practices and making sure that hard work pays off.

‘We are also levelling the playing field for businesses, ensuring that good firms which give all the tips to workers are not undercut by the firms which keep the money.’

There are currently no rules around non-cash tips and optional service charges (Picture: AFP)

The new laws are likely to hit businesses with additional administrative costs, meaning food and drink bills may rise as a result.

As it stands, many venues make deductions from service charges and non-cash tips to cover banking charges and processing costs associated with distributing the money into workers’ pay packets.

London’s famous River Cafe was criticised after it was reported earlier this year that the optional 12.5 per cent service charge was not shared with waiters. Bosses defending the policy said it helped guarantee they could pay workers the London Living Wage.

A similar controversy surrounded Pizza Express when it was revealed that service charges were being shared between waiters and cooks instead of being directed to front-of-house staff.

Waiters criticised Pizza Express for giving some of their tips to kitchen staff (Picture: Pizza Express)

The new legislation follows a private members’ bill tabled by Tory MP Dean Russell in June.

At the time, he said: ‘When we look at the role that many people have when working in bars or restaurants and so on, the tips are often seen as part of the salary in a way – rightly or wrongly.

‘It’s always felt wrong to me that businesses can take the tips that have been given by the customer directly to that individual or to the staff for businesses to go “Well, actually, that’s part of the payment for what they’re getting”.’

‘I think for most people, when they do leave a tip for someone, they’ve left it for that person or for the staff, not for businesses to take an extra chunk of it.’

The Department for Business has been approached for comment.

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