New UK tipping law could hike prices in restaurants, pubs and salons from Tuesday

-Credit: (Image: Reach Publishing Services Limited)
-Credit: (Image: Reach Publishing Services Limited)


Restaurants, taxi firms, hairdressers, hotels, pubs and cafes may be compelled to hike prices due to a new tip-sharing law set to take effect this October. The forthcoming regulations, effective from Tuesday, will prevent these businesses from keeping tips or service charge payments from their staff, regardless of whether they are paid in cash or by card.

UK Hospitality's CEO, Kate Nicholls, has indicated that businesses have "been gradually getting ready for this" and are transitioning towards adopting a best practice code endorsed by unions.

Saxon Moseley, the head of leisure and hospitality at consultancy RSM, cautions that businesses who have been utilising the service charge to supplement wages or offset their wage bill will still need to pay their employees, but won't be able to depend on this extra income anymore. He commented: "And in that scenario, margins will be hit, in some cases fairly drastically."

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Michael Powner, an employment partner at Charles Russell Speechlys, underscored the difficulties of reaching a fair agreement under the new rules, 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."

Bryan Simpson, a representative for the Unite union's hospitality staff, has also expressed his views on the issue, as reported by Birmingham Live.

He alleged that some are "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 declared.

The legislation seeks to boost the earnings of roughly two million waitstaff and other hospitality employees. The Government is enacting the law on Tuesday, more than eight years after a prohibition was initially suggested.

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