New tipping law set to hit businesses from October 1

woman drops a coin in a tip jar
-Credit: (Image: Getty Images)


Restaurants, along with taxi firms, hairdressers, hotels, pubs and cafes, may increase prices in response to a new tip-sharing law coming into effect from October. The new regulations, which come into force on Tuesday, October 1 will stop these businesses from withholding tips or service charge payments given by customers, whether paid in cash or by card.

Kate Nicholls, chief executive of UK Hospitality, has stated that businesses have "been gradually getting ready for this" and are moving towards adopting a code of best practice endorsed by unions.

Saxon Moseley, head of leisure and hospitality at consultancy RSM, said: "Those that have been using the service charge to pay staff or to partly offset their wage bill are still going to have to pay their staff, but now won't be able to draw on this cash fund. And in that scenario, margins will be hit, in some cases fairly drastically."

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Michael Powner, Employment Partner at Charles Russell Speechlys, highlighted the challenges of reaching an agreement, stating: "Employers need to ensure that what is agreed is 'fair' and that there is rational reasoning in place, while avoiding any potentially discriminatory rules."

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Bryan Simpson, who organises hospitality staff for the Unite union, has also spoken out on the matter, reports Birmingham Live. He claimed some companies were "deliberately misinterpreting the new fair tips legislation to suit business needs rather than the workers". "We will be doing everything in our power industrially, politically and legally to ensure that any unfair tipping policy is challenged," he added.

The legislation aims to increase the earnings of around 2 million waiting staff and other hospitality workers. The government is introducing the law on Tuesday, over eight years after a ban was first proposed.

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