Employment (Allocation of Tips) Bill 2022-23: Progress of the Bill

The Employment (Allocation of Tips) Bill 2022-23 is a Private Member’s Bill originally sponsored by Conservative MP Dean Russell who came eighth in the Private Members’ Bill ballot for the 2022-23 session. The Bill’s current sponsor is Conservative MP Virginia Crosbie.

The Bill had its first reading on 15 June 2022 and passed second reading on 15 July 2022. The Bill completed its committee stage on 12 October 2022 without amendment. It is listed for remaining stages on 20 January 2023.

The explanatory notes for the Bill (PDF) were drafted by the Department for Business, Energy and Industrial Strategy.

Background

In 2015 there were media reports of unfair tipping practices by major restaurant chains and other hospitality outlets, such as deducting from tips before passing them on to workers. This led to calls for reform to require employers to pass on all tips and service charges in full.

There were renewed calls for reform during the Covid-19 pandemic amid concerns that changing payment habits were seeing a fall in cash tips alongside wider challenges for the hospitality sector. The Government said in September 2021 80% of all UK tipping now happens by card, rather than cash, and suggested this means businesses are less likely to pass tips onto staff.

There have been a number of Government consultations and proposals in this area, beginning with a 2015 Call for Evidence on tips, gratuities, cover and service charges. This was followed by a 2016 consultation on Tips, gratuities, cover and service charges: proposals for further action seeking feedback on whether employers should be prevented from making any deductions from such payments.

In 2018 the Government announced its intention to legislate to prevent employers from making deductions from tips, as part of a package of New measures to support workers, businesses, and entrepreneurs. Measures to meet this commitment were included in the Employment Bill proposed in the December 2019 Queen’s Speech. The Employment Bill was not ultimately introduced in the 2019-21 session and did not reappear in the 2021 or 2022 Queen’s Speeches.

What does the Bill do?

The Employment (Allocation of Tips) Bill would amend the Employment Rights Act 1996 to insert new legal obligations on employers. These would 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 introduce obligations to ensure the fairness of arrangements to distribute those tips among workers, either when distributed by the employer or via an independent tronc.

Under the Bill, the Secretary of State would be able to introduce a new code of practice about the fair and transparent distribution of qualifying tips, gratuities and service charges which would help to indicate what would count as a fair distribution for the purposes of the new legal obligations.

These provisions would apply both to those working directly for hospitality businesses and to agency workers supplied to work in those businesses.