A new law brought in this month requires that 100% off all tips must make it to workers.
By cash or by card…
All gratuities, however they are paid, whether given in cash, or an additional amount added to the final bill by card, must reach workers. This also includes any service charge automatically added to a final bill. If any amount of the gratuity or service charge is kept by the employer, they are now breaking the law! If workers believe they are not receiving their tips, they are able to bring their claim to an employment tribunal.
It has long been questioned whether a tip paid actually makes it to employees, or whether it’s held by the employer. In the past many businesses have even been accused of using tips to bolster up an employees salary. With a shift away from cash payments, most tips are now added by card making it far easier for an employer to be less transparent about where tips end up.
Still room for debate…
Tom Moyes, partner at Blacks Solicitors, says the aim of the law is to instil “transparency and fairness,” However, Mr Moyes said the question of “fairness” is not clear cut. “Is there an argument that more senior people should be entitled to a greater level of tip, or is the reverse true?”
The new legislation does not give guidance on how tips should be divided, only that an employer must pass tips to an employee by the end of the following month from when they were received. Workers will still pay tax on tips earned.
The outcome…
It’s predicted that more than 3 million service workers will share an additional £200m in tips and gratuities. The new legislation came into force on October 1st but has yet to be introduced in Northern Ireland.
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