All 5 contributions to the Employment (Allocation of Tips) Act 2023 (Ministerial Extracts Only)

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Employment (Allocation of Tips) Bill

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2nd reading
Friday 15th July 2022

(1 year, 10 months ago)

Commons Chamber
Employment (Allocation of Tips) Act 2023 Read Hansard Text Watch Debate

This text is a record of ministerial contributions to a debate held as part of the Employment (Allocation of Tips) Act 2023 passage through Parliament.

In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.

This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here

This information is provided by Parallel Parliament and does not comprise part of the offical record

Jane Hunt Portrait The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jane Hunt)
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Thank you very much indeed, Mr Deputy Speaker.

I thank my hon. Friend the Member for Watford (Dean Russell) for bringing this important Bill forward. He is well known for his hard work both for his Watford constituents and in supporting his colleagues, but now he will possibly be able to transform the whole country, based on this work.

I am pleased to confirm that the Government will support this Bill. Bringing these new rules into force will give new protections to millions of workers in industries where tipping is common, such as hospitality. This is especially crucial now as we continue to recover from the pandemic.

Hon. Members were given quite detailed information about their own constituencies to help them during the pandemic, and I was surprised to find that there are 3,000 people employed in the hospitality sector in Loughborough alone. That equates to exactly the same number as my biggest employer, so that was quite a surprise and very interesting.

It is good to hear support for the Bill in this House. I will take some time to address some of the points hon. Members have raised today, but first I will speak a bit more about why the Government are supporting it. Many were appalled to hear the stories a few years ago of bosses wrongfully pocketing tips intended for their workers—money left by customers who wanted to recognise the hard work and excellent service they had received from the staff.

That is why my Department took action to understand the scale of the problem. We launched a consultation to determine whether previous voluntary guidance in this area was sufficient. We have continued to develop policy positions based on evidence and conversations with stakeholders. The Government believe that tips should go to the workers who earn them and that businesses that withhold tips from staff are wrongfully benefiting from money intended for hard-working staff. While many businesses already pass tips on to staff in full, our evidence shows that nefarious practices persist, with businesses deducting up to 10% in some cases.

Some people have raised concerns with us that bad practice has increased since the pandemic. The Government are therefore pleased to support the changes in the Bill, and I will reiterate some of the key details about what the new rules will and will not do. As my hon. Friend mentioned, upon passage of the Bill the rules will prevent employers from making any deductions when distributing tips, apart from those required or permitted by existing legislation such as tax law.

We are not making any changes to tax law under the new rules. How tips are treated for purposes of taxes and national insurance contributions depends on whether they are made in cash or by card and whether they are made directly to the worker or processed by the business or by independent tronc. That will remain the case.

Under this Bill, anyone who is a worker will benefit from new rights, but it does not cover those who are self-employed. The rules will apply across all sectors, and that is the right thing to do. However, to be clear, businesses that do not normally deal with tips will not be significantly affected by the Bill. This is also a good opportunity to remind the House that tips already cannot be used to count towards national minimum wage pay. That has been the case since 2009.

Chris Stephens Portrait Chris Stephens (Glasgow South West) (SNP)
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I am grateful to the Minister for re-emphasising that point. Will she confirm that it is still the Government’s intention to pursue rigorously employers who are still trying to make tips part of the national minimum wage and that those companies should be named and shamed, as is currently the case?

Jane Hunt Portrait Jane Hunt
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I thank the hon. Gentleman for his question, and I can tell him that, yes, that is absolutely the case.

I will now talk about the proposed code. A voluntary code of practice on this topic was published in 2009. Our evidence shows that voluntary guidance alone has not been enough to stamp out bad practice. This Bill will therefore require employers to have regard to a statutory code of practice. The code will continue to be developed in partnership with key stakeholders, and will be subject to a full consultation period before the final version is brought to the House for approval. The code will outline a fair and transparent allocation of tips, as set out in different example scenarios. It is very important that the code continues to be developed with stakeholder input, so that we do not inadvertently disallow certain arrangements that are considered fair in some workplaces for the benefit of both businesses and workers. It is important that the code can be updated in the future with the approval of Parliament but without any primary legislation, in order to keep up with changing practices.

I will now address some of the specific points made by colleagues in the debate. I thank my hon. Friend the Member for Watford again for all he has done. He raised a matter where I almost have to declare an interest, in that my husband interrogates the waiters whenever we go out to make sure that they are going to get the tip—it is surprising how many say that they will not get it. My hon. Friend the Member for Kensington (Felicity Buchan) clearly showed a good understanding of her local businesses and her constituency. She talked about burgers, and I quite agree that it is the service we pay for in the tip, not the burger itself. As she said, each establishment will create its own fair system available to everyone working there, so that the kitchen staff and cleaners can be included. They can decide what they want to do and that will then be followed. She also referred to consumers, and the Bill is fair to them as well. They are within my brief too, so I would like to be fair to them. I commend her for what she did while working in the Department for Business, Energy and Industrial Strategy until recently.

My hon. Friend the Member for Broxtowe (Darren Henry) talked about his experience and examples from restaurants in Broxtowe, and I can speak from experience when I say that the restaurants there are very good indeed. My hon. Friend the Member for Hartlepool (Jill Mortimer) talked about the great variety of restaurants on the Hartlepool riviera, which provide such great service to the people of Hartlepool—again, she is to be commended. My hon. Friend the Member for Charnwood (Edward Argar) talked about statutory protections that are currently lacking in the system and about rewarding the service given. He referred to the need to be timely and fair, and the word “fair” comes through again and again in this Bill. He is absolutely spot on.

I thank my hon. Friend the Member for Meriden (Saqib Bhatti) for his kind words and I thoroughly enjoyed working with him on the all-party group for small and micro businesses. He talked about a shortage of workers because of the pandemic, and indeed previous to that. I hope that this Bill will attract workers to the sector and help it to become one where people can form a career and get on in life. I am happy to meet him to discuss the hospitality sector, as he requested.

The shadow Minister, the hon. Member for Bristol East (Kerry McCarthy), referred to her surprise about some of the well-known businesses that have been taking tips. I absolutely agreed with her on that, as I was surprised as well. Conservatives always support hard work, and I think that is the vein in which we have been talking more than anything else.

The hon. Member for West Ham (Ms Brown), and my hon. Friends the Members for Watford, for Cheadle (Mary Robinson) and for Meriden raised concerns about employers using tips to top up low-paid workers. The law is clear: tips, gratuities and service charges cannot count towards the minimum wage. The Bill does not alter that position, and under these proposals employers cannot use tips to make up national minimum wage pay. My hon. Friend the Member for Meriden rightly said that we need more workers to get the pay and tips they have earned, to help promote employment in the sector, as I mentioned. Actually, there is no need to wait for this Bill to be passed; the sector should put its plans in place well in advance.

My hon. Friend the Member for Watford referred to deductions from tips for card payments and admin fees. To be clear, under this policy, employers must pass on all tips to workers without any deductions, other than those required or permitted by existing legislation—for example, normal tax rules will apply. They cannot make any deductions to cover the costs of running a business, including the cost of processing card transactions or other administrative costs.

My hon. Friends the Members for Watford and for Meriden referred to clarity around the code of practice. As I mentioned, the statutory code of practice will be published and consulted on before being laid before both Houses of Parliament for approval. The code will be developed through consultation in partnership with stakeholders. We hope to start informal discussions on the draft code later this year. There will be more formal consultation on a draft after the Bill has received Royal Assent. The code will provide details on when the Bill applies, how many employers should distribute tips fairly, tronc arrangements, employers’ tipping policies and record keeping. It will also include illustrative scenarios, such as sharing out tips between front of house staff and kitchen staff.

In conclusion, bringing forward these new rules will protect more than 2 million workers from bosses who do not currently do the right thing, and give them an avenue for seeking remedies. Businesses will be assured that they are not being undercut by companies where bosses are keeping tips for themselves, and consumers will have increased confidence that their tips are going to the workers they intended them for. The new rules are backed by previous Government evidence and analysis. The Government are therefore pleased to support this private Member’s Bill.

Chris Stephens Portrait Chris Stephens
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I thank the Minister and I congratulate the hon. Member for Watford (Dean Russell) on bringing forward this important Bill. I make a similar plea to hon. Members about the previous Bill: will she discuss with the Leader of the House how we can get the legislation through quickly? I would like to take part in Committee if possible.

Jane Hunt Portrait Jane Hunt
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Yes, of course I will ask about that. There are reasons, related to HMRC and that kind of thing, why it might still be delayed, but I will do exactly as the hon. Gentleman requests.

It is good to see the support for the Bill in the House today. If we take away—takeaway is the operative word, given what we are talking about—one thing, it is fairness. I look forward to continuing to work with the Member in charge of the Bill, my hon. Friend the Member for Watford, who is a dear friend and works tirelessly for the people of Watford, and with stakeholders to support the passage of the measures.

Employment (Allocation of Tips) Bill

(Limited Text - Ministerial Extracts only)

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Committee stage
Wednesday 12th October 2022

(1 year, 7 months ago)

Public Bill Committees
Employment (Allocation of Tips) Act 2023 Read Hansard Text

This text is a record of ministerial contributions to a debate held as part of the Employment (Allocation of Tips) Act 2023 passage through Parliament.

In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.

This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here

This information is provided by Parallel Parliament and does not comprise part of the offical record

None Portrait The Chair
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Okay. I understand that the shadow Minister has a personal issue that means she is unable to be here this morning, so I call the Minister.

Dean Russell Portrait The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Dean Russell)
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It is an absolute pleasure to serve under your guidance, Ms McDonagh.

As has been kindly noted, until recently I was the policy sponsor for this Bill; I am honoured to be the responsible Minister and to see it through the whole way. I thank my hon. Friend the Member for Ynys Môn for stepping in to sponsor the Bill, and I thank the other Committee members for their time and energy. Personally, it means a lot to me, and it will mean immense amounts to the millions of workers we will help by getting the Bill through Parliament. It will make a difference to them.

This is about fairness. The issue of protecting workers’ tips is not only close to my heart but incredibly important to so many. I am grateful that we have cross-party support, as indicated today and on Second Reading, to help to take the Bill forward.

Judith Cummins Portrait Judith Cummins (Bradford South) (Lab)
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I welcome the Minister to his place. Will he outline the broad support that the Bill has received not only from individual trade unions but, importantly, from the TUC?

Dean Russell Portrait Dean Russell
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I thank the hon. Lady for her comments. It has been fantastic to engage with all those groups and I am immensely grateful to all those who have lobbied and pushed for this legislation. I will come to this point later in my speech, but the Government originally explored this issue in 2015, and the discussion goes back way longer than that. I am grateful to everyone who has been involved. I am not sure whether I am allowed to allude to myself as the hon. Member for Watford, but in his speech on Second Reading the hon. Member for Watford said that he felt very much that he was standing of the shoulders of giants, as I do, and we really are. This change has long been fought for and I am pleased that the Government listened to me when I was a Back Bencher. I am now very pleased to be the one listening and helping to make this change happen.

This change is happening because many people were appalled to hear the stories over the past few years of bosses wrongfully pocketing tips that were intended for workers. The money left by customers who wanted to recognise the hard work and excellent service of staff was taken by businesses; at times they took up to 10%, and we heard about the awful, nefarious practice of staff not receiving tips at all. The Bill will stop that practice. The Government believe that tips should go to the workers who earn them and that businesses that withhold tips from staff wrongfully benefit from money that is intended for hard-working staff.

Ultimately, the Bill will stop that conversation we have at the end of a meal or after having received good service—I think we have all said, “Are you definitely going to get this tip?” It is important that the Bill will end that conversation.

Ian Levy Portrait Ian Levy (Blyth Valley) (Con)
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Does my hon. Friend agree that the Bill will encourage people who work in the hospitality industry to realise that they are actually going to get the tips for the service they give? In itself, that will encourage better service, because it will give people that feeling that they want to put more into the job.

Dean Russell Portrait Dean Russell
- Hansard - - - Excerpts

Absolutely. The Bill will give everyone certainty: in a time of particular uncertainty, especially as we face the cost of living crisis, people will know where they stand. Of course, it will take some time for the legislation fully to come into force, but organisations should put measures in place now rather than wait for the law to change. That is how it should have been anyway, but the Bill will make sure that businesses with bad practices deliver the right thing in the short term and onwards.

Mary Robinson Portrait Mary Robinson (Cheadle) (Con)
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I was pleased to be in the Chamber to support my hon. Friend when he was the promoter of this much-needed Bill, so it is great to see him in his place to take it even further. First, how will we ensure that the 2 million people we are trying to help with the Bill get the message? Will the Government run a public relations campaign to ensure that those people know their rights? Secondly, some unscrupulous employers will not treat people in the right way, so it is good to see in the Bill clauses to protect people who could be affected. Of course, some people end up in employment tribunals because they have been sacked or unfairly dismissed because they have complained about a process, so will the Minister, in his new position, also advocate for whistleblowers, to ensure that they too get the right protections in law?

Dean Russell Portrait Dean Russell
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I know how important my hon. Friend’s campaigning on whistleblowing is for her and I appreciate her raising it. I will come to the tribunal process later in my speech. In terms of communications, it has been wonderful that, from the early stages of the Bill, the media have been very active in promoting it, and I know that the Government have been very much promoting it. This is also about transparency, which I will come to, in terms of not only ensuring that businesses are clear with their staff but making it clear to the public that members of staff will be keeping 100% of their tips. That is a key part of the Bill that it is so important to get across: 100% of their tips—everything that they are given—should be shared fairly with staff.

I will continue with my speech, so that we can come to a close. All the points that have been made show why the Government stand resolutely behind the Bill. We want to see it enacted, benefiting millions of workers in industries where tipping is common, such as hospitality, which is such a huge workplace for so many. My hon. Friend the Member for Ynys Môn has set out how the clauses protect workers and why that is so important, and I am pleased to say that the Government support all the clauses. I will reiterate a few points on why they should stand part of the Bill.

The Bill will prevent employers from making any deductions when distributing tips, apart from those required or permitted by existing legislation, such as under tax law. That ensures that all money left by customers is passed to workers in full—I reiterate the words “in full” as often as I can. The Bill also establishes a requirement to allocate tips fairly—fairness is at the heart of the Bill—between workers at a place of business. That protects vulnerable workers and prevents exploitation.

A statutory code of practice will help to promote fair allocation of tips. The code will be developed with the help of key stakeholders and will be subject to a full consultation period before the final version is brought to both Houses for approval. On the point that my hon. Friend the Member for Cheadle made, that consultation is key, because it will help to raise awareness of what organisations and workers want but also make them aware that this is going to happen across all the sectors affected. It will ensure that the diverse views and practices of stakeholders are taken into account in preparing the code. To support enforcement of these new requirements and hold employers to account, the Bill will also require employers to have a written policy on tips and to maintain records relating to tips. These measures will be enforced by employment tribunals, with the tribunal empowered to revise allocations of tips and order compensation of workers.

The hon. Member for Glasgow East, who is not in his place, made some wonderful comments, and I reiterate my thanks to him for them. He asked why this legislation is not being brought forward as part of an employment Bill and is, instead, a private Member’s Bill. The Bill highlights a very important issue, and I am pleased to say that there is cross-party consensus that tips should be fairly attributed to workers. I know, because I felt it at the time, that it was disappointing that the Queen’s Speech did not include an employment Bill for the third Session of this Parliament, but we remain committed to bringing forward legislation to deliver on our commitments on employment rights, and I know that there are several other pieces of legislation coming through.

Chris Stephens Portrait Chris Stephens
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I am grateful to the Minister, who is, as always, generous in taking interventions. A number of Members have stepped in where the Government have not acted—a number of private Members’ Bills are being tabled that address issues of employment and workers’ rights. Will the Minister commit to look at those pieces of legislation and meet the hon. Members who have put them forward, so that we can tackle some of the issues and injustices that take place at work?

Dean Russell Portrait Dean Russell
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I thank the hon. Member for his comments. I am always happy to meet Members and discuss how they feel we can create better workplaces and support workers’ rights. I already have many meetings with colleagues to ensure that we are heading in the right direction on that.

With regard to the comments made by the hon. Member for Glasgow East, I want to be clear that more needs to be done to ensure that tips earned by workers go to them in full, which is why the Government are supporting the Bill. I am incredibly grateful to my hon. Friend the Member for Ynys Môn for taking forward this legislation.

I also note the comments made by my hon. Friend the Member for Dewsbury about his son, Liam. I know he is a proud father of Liam; he regularly talks about how proud he is of him. Liam is a credit to him, with the work he is doing while at university. The key point my hon. Friend made is that this is not about topping up salaries. That is an important point in the Bill, and it is important that we communicate it. This is a gratuity, tip or service charge that is a “thank you” on top of a salary. It should never be used by employers, and the Bill makes it clear that this is not about topping up salaries; it is about an additional piece and making sure that workers receive tips fairly and squarely.

I will now conclude, because we have covered a lot of ground and I am very pleased with the feedback from the Committee. The Bill provides vital protection for low-paid workers. Bringing forward these new rules will protect over 2 million workers from bad bosses and give them an avenue to seek remedies. It will be good for businesses too, as they will be confident that they are not being undercut by companies where bosses are keeping tips for themselves. The Bill is an excellent step. My hon. Friend the Member for Ynys Môn has received support from both sides in the House and in Committee, and I want to thank everyone for the collaborative way we have all worked, for the way that the feedback has come in and for their support inside and outside the Chamber to make sure that workers are protected in this way. I look forward to following the Bill through its parliamentary stages.

Virginia Crosbie Portrait Virginia Crosbie
- Hansard - - - Excerpts

This House is at its best when people work together, and the Committee has been a shining example of that co-operation and collaboration. I thank all hon. Members who have been on this short Committee. As a Welsh MP, I am delighted that there are two other Welsh MPs, both of whom are women, on the Committee. Tourism is a key sector in Wales, contributing around 12% of all employment.

I thank those who contributed to the debate. My hon. Friend the Member for Dewsbury talked about his son Liam, who has had a very positive experience in the hospitality sector. The hon. Member for Glasgow East talked about a level playing field, and I congratulate him on his private Member’s Bill on neonatal care. The hon. Member for Glasgow South West talked about the support of the unions, and Kate Nicholls, who heads up UK Hospitality, has been very helpful with the Bill. My hon. Friend the Member for Blyth Valley talked about fairness, and my hon. Friend the Member for Cheadle talked about the importance of a PR campaign and whistleblowing.

This is an important Bill, which enshrines a right that seems evident to many consumers already, and I am sure hon. Members will agree that it is not right that business owners can keep part or all of the tips given in good faith to workers by customers who recognise the good service they have received.

Employment (Allocation of Tips) Bill

(Limited Text - Ministerial Extracts only)

Read Full debate
3rd reading
Friday 20th January 2023

(1 year, 4 months ago)

Commons Chamber
Employment (Allocation of Tips) Act 2023 Read Hansard Text Watch Debate

This text is a record of ministerial contributions to a debate held as part of the Employment (Allocation of Tips) Act 2023 passage through Parliament.

In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.

This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here

This information is provided by Parallel Parliament and does not comprise part of the offical record

Kevin Hollinrake Portrait The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Kevin Hollinrake)
- View Speech - Hansard - - - Excerpts

First, like the shadow Minister, let me declare my interest. I have two young daughters who work in the hospitality sector and who may benefit from this legislation. Happily, I am pleased to say that the Bill will also benefit around 1 million other people to the tune of £200 million per annum.

I thank my hon. Friend the Member for Ynys Môn (Virginia Crosbie)—I hope I have pronounced her constituency correctly because we have had some problems with pronunciation this morning—for her very hard work in bringing the Bill forward to Third Reading. The Bill is about fairness, transparency and, again, our efforts to make this society a fairer one. I am pleased that she has taken on the sponsorship of the Bill. Obviously, I thank the previous sponsor, my hon. Friend the Member for Watford (Dean Russell), for his work on such an important piece of legislation and for his campaigning on this issue. This is not just about his work in taking the Bill forward, because he has been amazing in campaigning on this. I thank my predecessors —not just him, but my hon. Friends the Members for Sutton and Cheam (Paul Scully) and for Loughborough (Jane Hunt).

It has been brilliant to hear the support in the House for these measures, and I will briefly reiterate why the Government are supporting the Bill. A few years ago, stories were highlighted in the news about bosses wrongfully pocketing tips intended for their workers. Both the Government and the public were appalled by that; money left by customers who wanted to recognise the hard work and excellence of staff was in some cases simply treated as part of the revenue of the business. That is why my Department took action to understand the scale of the problem and launched consultations, as has been mentioned. We were then able to publish a full impact assessment to support the Bill. The Government believe that tips should go to the staff who earn them, rather than the business, and that businesses that withhold tips from staff are wrongfully benefiting from money intended for hard-working staff.

The Bill prevent therefore employers from making deductions when distributing tips, apart from those required or permitted by existing legislation, such as under tax law. That will ensure that all money left by customers is passed to workers in full, as intended. The Bill also establishes a requirement to allocate tips fairly between workers at a place of business. That protects vulnerable workers and prevents exploitation. As we have mentioned, a voluntary code of practice on tipping was published in 2009. Our evidence shows that voluntary guidance alone was not enough to stamp out bad practice. Therefore, this Bill goes a step further and requires employers to give consideration to a statutory code of practice when considering how tips should be distributed. The code will continue to be developed by the Government, in partnership with key stakeholders, and will be subject to a full consultation period before the final version is brought to this House for approval.

Let me address some specific points made by hon. Members in this debate. The hon. Member for Reading East (Matt Rodda) talked about the benefits to lower-income workers and to towns with lots of hospitality workers, such as Reading, and indeed places in Thirsk and Malton and many other constituencies represented here today. My hon. Friend the Member for Watford talked about snollygosters. I do not know whether that piece from Quentin Letts referenced my hon. Friend personally, but being mentioned in one of his articles is always a badge of honour, regardless of whether the comments are derogatory. My hon. Friend also said that this measure is about fairness and clarity, and the simple question when one is handing over a tip: “Do you get this?” He said this should not be about topping up salaries. I say that it should be about driving up service, as these tips are paid to people who do a good job. Let me answer the question put by my hon. Friend the Member for North East Bedfordshire (Richard Fuller) on my tipping policy shortly.

There are some burdens on businesses as a result of this measure, particularly on record keeping. We should bear that in mind when we legislate, but, on balance, I think this Bill is fair. My hon. Friend the Member for Cheadle (Mary Robinson) talked about fairness and about how most employers do the right thing but some do not. She also talked about the confusion regarding making cash or card payments, and what happens to such payments. This is not just about hospitality, as this applies to other industries, such as the beauty industry. I should point out that this Bill does not cover every sector; requirements in here about record keeping and the like, and the passing on of tips, apply only to businesses that receive tips on a more than exceptional or occasional basis. So this does not cover every instance; it applies just where tips are routinely paid.

My hon. Friend the Member for Wantage (David Johnston) talked about not just hospitality, but the key element of access to cash, on which the Government are undertaking another stream of work.

My hon. Friend the Member for North Devon (Selaine Saxby) talked about the fantastic hospitality venues that are essential to the economy in her area—as, indeed, they are to the economy in mine. She is a huge advocate for business. Many of us on the Government side of the House are for business because we are from business. I know that she is, and I welcome that.

My hon. Friend the Member for Sedgefield (Paul Howell) talked about his local hospitality venues. I have visited a number of them, not least Sedgefield racecourse on occasion, which is always a treat. He talked about how this change will be overseen and gave the example of sole traders. This legislation will be employment law and will apply only to people who are employees. The code of practice will go into that in more detail.

My hon. Friend the Member for Clwyd South (Simon Baynes) was born and bred in the hospitality sector and so speaks with real authority. He used the words that I probably mention more than any other in my role as Minister for business: “fair” and “level playing field”. That is absolutely right, and that is what we seek to achieve. He also talked about the representations from Michael Kill from the Night Time Industries Association and how this change is important to attract workers into the sector, and about the great work of Kate Nicholls for the hospitality sector.

My hon. Friend the Member for Leigh (James Grundy) talked about this being a token of thanks. That is absolutely right, because that is what drives service.

My hon. Friend the Member for North East Bedfordshire, as always, challenged us in a number of areas. He mentioned the number of consultations we have held, and basically told us to get on with it. That is what we are doing today, of course: getting this legislation through and putting it into effect as quickly as possible. He talked about whether employment tribunals will have the capacity to deal with these issues. Work is under way across Government to expand capacity within employment tribunals. He talked about cash and cards, and what goes to whom. As he said, cash is by right the property of the employee, unless the employment contract says that it is not. The Bill will clarify that, in any circumstance, whether there is a service charge or not—that is also covered—this money will go to the employees. That is a critical part of this legislation.

Richard Fuller Portrait Richard Fuller
- Hansard - - - Excerpts

It would be helpful if the Minister confirmed that, as of this Bill passing, when people see a service charge on a bill, they can say that it is covered, that it counts as a tip and that it will go to the employees rather than to other uses within the firm.

Kevin Hollinrake Portrait Kevin Hollinrake
- Hansard - - - Excerpts

That is correct.

My hon. Friend also talked about my personal tipping. Do I tip? Yes. By standard, if there is no service charge, I would usually tip 10%, or sometimes more, based on performance. Sometimes I will tip nothing, if I do not feel that the service has been at that level. Do I tip if I do not pay for the meal? I normally pay for the meal as well actually, but I have offered to on occasion. I think that covers all his questions, but if he has any more, we can deal with them by separate means.

To respond to the shadow Minister, I again refer to my earlier comments about an employment Bill. The key thing is that we are getting on with key legislation that we think is important. It is not just this legislation; there are other pieces of legislation addressing flexible working, carer’s leave and other issues. She talked about enforcement, which is hugely important. Legislation without implementation is pointless. One of the most effective parts of our regulatory system in the UK, in my view, is employment tribunals. There is no pan-employment regulator in the UK, which, when we think about it, is quite a surprise—there are some in some sectors. There are 30 million people employed in this country, and employment tribunals do a fantastic job, at a fraction of the cost of other regulators. It is ex-post regulation, and I think a more effective means of doing that is through employment tribunals, which are principally a mechanism for enforcement.

The hon. Member talked about zero-hours contracts. A very small proportion of people in this country are on zero-hours contracts—2% to 3%. Many of them are on a zero-hours contract for good reasons and want to be on one, but she raised an important point. This is something we are looking at and determined to tackle. There are some abuses of the system, and we are keen to bring forward new regulations to make sure we tackle that area.

In conclusion, bringing forward the new rules will protect more than 2 million workers from bad bosses and give them an avenue to seek remedies. Businesses will be assured they are not being undercut by companies where bosses keep tips for themselves and consumers will have increased confidence that their tips go to the workers they are intended for. The new rules are backed by Government evidence and analysis. The Government are therefore pleased to reiterate their support for this private Member’s Bill. It has been wonderful to see the support for it in the House during today’s debate.

If I may, I would like to list the civil servants involved, and there are a number of them: Flora Strange, Lucy Allatt, Yasna Reynolds, Mary Smeeth, Tony Gordon, Joe Giles, Simi Bhamra, Bex Lowe, Richard Lewis, Abigail Bridger, Rachel Senior—I can see the Whip moving closer to me; oh no, it’s not, it is the next Minister. I will conclude very shortly!—Anthony Morris, Cora Sweet, Nadine Othman, Laura Matthews, Clara Thiel, Patrick Day and Harry Ravi. Finally, I very much look forward to working with my hon. Friend the Member for Ynys Môn and stakeholders to support the passage of these measures as the Bill moves to the House of Lords. I commend the Bill to the House.

Nigel Evans Portrait Mr Deputy Speaker (Mr Nigel Evans)
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If the Minister was ever to invite us all out for dinner one night, I think we would like to see his tipping style in action, wouldn’t we? Fascinating.

Employment (Allocation of Tips) Bill

(Limited Text - Ministerial Extracts only)

Read Full debate
2nd reading
Friday 3rd March 2023

(1 year, 2 months ago)

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Employment (Allocation of Tips) Act 2023 Read Hansard Text Watch Debate

This text is a record of ministerial contributions to a debate held as part of the Employment (Allocation of Tips) Act 2023 passage through Parliament.

In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.

This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here

This information is provided by Parallel Parliament and does not comprise part of the offical record

Lord Johnson of Lainston Portrait The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
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I thank the noble Baroness, Lady Chapman, very much indeed—she could always give me a tip for the work we are doing today, but I do not expect one. I pay tribute to my noble friend Lord Robathan for bringing this Bill forward, and I also make special mention of Dean Russell, the honourable Member for Watford, for the tireless work he engaged in to make sure that after a long period, this very important matter is now placed before this House.

It comes down to a simple matter of fairness. As customers, we were all surprised by this, and I was certainly surprised to discover that the tip I gave when I went to get my family pizza was not going to the staff—the people in the restaurant who were expecting it, and whom I was expecting to pay. For me, this is as much a matter of accurate description, to ensure that what people are saying is happening actually is. At the end of the day, this Government are committed to fairness and ensuring that employees get the right rewards that it is expected they will receive. I am delighted to take this Bill forward today.

I will go through some of the points that were raised. I covered the point made by the noble Lord, Lord Browne, in that now absolutely is the time. Looking back over the last few years, we were disturbed by the Covid crisis, but the initial voluntary scheme simply did not work, which was a pity. In my experience, the majority of restaurateurs are good, honest hardworking people, and it is important to highlight that running a restaurant is not a straightforward business, particularly for small restaurants. Restaurants and pubs are important to our community, and it is important that we support them and do not impose onerous legislation on them. But unfortunately, because the voluntary code of practice was not a success—and that had to be borne out in time—we were obliged to go into a consultation, and here we are. There is no looking back from this point, but it has taken a while for good reason.

Regarding the contribution of the noble Lord, Lord Mitchell, I do not know whether Your Father’s Moustache is still in existence, but it sounds like he was earning more then—adjusted for inflation—than he might be being paid to attend the House today. I must therefore question his business acumen, quite apart from his patriotism.

I will cover some of the important points that have been raised, first, on agency workers. At the core of the Bill, the honourable Member for Watford and other officials have been trying to work out how to make this fair. It is considered in principle fair to pay temporary staff in a place of hospitality for the work they do. It would seem appropriate that, if someone works for a period in a restaurant or pub, they be rewarded with a share of the tips, commensurate with their input. Having said that, there have been comments—such as those of the noble Lord, Lord Mitchell—about additional pay for agency workers as opposed to full-time workers, who may be more committed to an establishment. This matter will be covered in the consultation and will be included in the guidance issued by the Secretary of State, which will eventually appear in the code of practice. It is not necessarily straightforward, and it is important that practices already in place in establishments passing on the full quantity of tips be able to continue. I believe that they will be able to continue with smoothing out the fairness between agency workers paid at different rates and full-time staff who are paid at potentially lower rates for their full commitment to the establishment. This is a principles-based activity, based on what is fair, and the system should be designed to ensure a smoothing out of that, but it is certainly worth raising.

The Bill is quite specific that credit card charges may not be passed on to the employee—to clarify, they may not be deducted. We feel that is important because it creates a level playing field for all employers in making sure that there is no discrimination. We found that under the voluntary code various different charges were being levied—the so-called administration charges—from 2% up to 10%. The reason we believe the voluntary code was not working is precisely that employers were starting to impose fixed-cost charges on tips that we felt were not right to go to the employee, so we have not allowed for credit card charges. There may be other charges that need to be considered in the consultation, but they will come out during that discussion. However, that is an important principle that has been laid out and made clear.

Multisite operations have been mentioned. That topic has arisen quite a lot in these discussions. We have sympathy regarding the complexities. Again, let us return to the principle of fairness and what is right. A lot of this will come out in the consultation and will be developed into the code of practice, but the principle here is that the unit itself—the restaurant or pub—is the economic entity that will allocate the tips to the individuals working in that place of employment. The Bill is designed specifically to ensure that that is the case. It is not designed to allow large corporations to pool tips and allocate them accordingly. We are trying to draw a line between the gratuity or pourboire given by the customer to the person who has been serving them and those around them. That is an important point of principle. I am sure this will be discussed in the consultation period, but I want to make it clear that currently it is specifically to ensure that a single site is the recipient of the tip process and then that is distributed accordingly.

The noble Lord, Lord Shipley, raised the importance of the consultation process, as did my noble friend Lord Bourne and the noble Baroness, Lady Chapman, and of ensuring that it is widely publicised. We do not necessarily have the resources in this instance to embark upon a highly expensive publicity campaign but actually I do not think that will be necessary. If any noble Lords in this House have been involved in this process, they will have been contacted by large numbers of restaurateurs and recipients of tips to ensure that their views are clearly heard. This is an emotive subject that commands a lot of popular appeal. We will make every effort to ensure that the consultation is widely held and that people are aware of the opportunities to contribute to the consultation process in order to effect a strong code of practice.

On the point about publicity and how to project an establishment’s tip policy to clients, it is clearly stated in the legislation that it has to be available to the employee on day one when they arrive, it has to be clearly stated, and it must be available for clients as soon as we have developed the code of practice so that they can see, if they wish, what the tip practice is. There is currently no specification to put an extended tip policy on the receipt or whatever—I think that might be rather cumbersome—but it should certainly be available to the client. More important than a technical description of how every dollar is allocated among the staff is the knowledge that we are putting in place today, thanks to the good work of my colleagues, a fair system where clients and customers who tip staff know that all that money is going to the deserving workforce who have created the environment and given the service that has been received.

The noble Baroness, Lady Deech, made a series of extremely thoughtful points. I too have enjoyed the concept of a troncmaster, which is a phrase that has only recently come into my vocabulary. That is a very practical way of delivering fairness among employees. In the work that I have done, I have been struck by how straightforward and sensible this system is, and we want to keep it sensible and straightforward. I emphasise that we are not trying to increase bureaucracy and burdens upon hard-working restaurateurs, innkeepers and pub owners. That is not what this is about. It is about fairness and making sure that the majority of restaurateurs who do the right thing are able to do so in a continuing fashion, and that the people who do not are made to.

The tronc system allows for an independent person, often someone associated with the restaurant—they might be its accountant or whatever, which is perfectly reasonable—to make sure that there is a fair allocation of tips. I understand that there are some troncmasters who franchise their operations so that there are multiple troncmasters, so there is a job there if the $60-a-day tip does not continue to come to the noble Lord, Lord Mitchell, in terms of making sure that there is a fair allocation. That seems to me to be an effective way of doing it. It was asked whether it was current and appropriate; we think so, and we have very much factored that into the legislation.

I do not want to go on too long but there was an important point about the monthly pay cycle. It is worth noting that in this House, when you go to one of the restaurants or eateries and you leave a gratuity, as I do—I hope I am known as a generous tipper—that money is accumulated over the year and then paid out in January to all the staff in the House of Lords. That includes the doorkeepers and the secretarial staff, though I am not sure whether it includes Hansard, the clerks and so on. The point is that this is more complicated than it seems. In the consultation we will work to ensure that fairness is the basis of this rather than procedure. The reason why we have the one-month payment cycle—that is, one month after money has been received—is to ensure that employers pay the staff on time for the work that they do when it comes to passing on tips from customers. That is absolutely right and it should be the core principle. Frankly, we should resist trying to find mechanisms and delays around that process, while at the same time understanding the importance of making sure that people who have systems that are fair can still operate, given the flexibility required.

I am grateful to my noble friend Lord Bourne for supporting a fast-track process. I do not think the House of Lords is necessarily known for its fast-track processes. I would not necessarily encourage any circumventing of our marvellous and ancient processes, but I agree that we should get on with it, and we are pleased to be doing so.

I thank the noble Baroness, Lady Chapman, for the comments that she made. I will say only that if she has a chance to engage with us, she will see that the code of practice will be detailed and there will be written policies. I do not believe we have suggested using ACAS as a process for managing organisations that do not pass tips on in full as they should; instead, it goes through the employment tribunal system. Whether that is run by ACAS I do not know, but we would certainly be delighted to engage on how the process should work. But we want to keep this quite light-touch. The last thing we want to see is employees having to go through complicated and cumbersome legal processes for something that should involve pretty immediate redress. If the noble Baroness has the opportunity to go through the legislation, she will see the detail that is there for relatively rapid redress processes.

To conclude, bringing forward these new regulations will protect millions of workers, among them many of the lowest paid across a wide variety of sectors, and give them an avenue to seek remedies. Consumers will rest assured that the tips they leave are going, as intended, to reward the good service and hard work of staff rather than lining the pockets of bosses. Additionally, those business that are already doing the right thing—passing on tips to workers in full without deductions—will be confident that they are not at risk of being undercut by their less reputable competitors, which is a very important point.

These new measures are backed by government evidence and analysis, with a full impact assessment of the measures having been published. Continued stakeholder engagement will ensure that we do not inadvertently disallow arrangements that are considered fair in some workplaces, as I have mentioned, meaning that we can continue to promote fairness for both businesses and their staff.

The Government are pleased to support these new measures and we are glad to see the level of support for them across the House. I have greatly appreciated that during today’s debate. All waiters and other restaurant staff will look to us, I hope, as a beacon of fairness as we bring this legislation into force. I look forward to continuing to work with my noble friend Lord Robathan to support the passage of the Bill.

Employment (Allocation of Tips) Bill

(Limited Text - Ministerial Extracts only)

Read Full debate
3rd reading
Friday 21st April 2023

(1 year, 1 month ago)

Lords Chamber
Employment (Allocation of Tips) Act 2023 Read Hansard Text Watch Debate

This text is a record of ministerial contributions to a debate held as part of the Employment (Allocation of Tips) Act 2023 passage through Parliament.

In 1993, the House of Lords Pepper vs. Hart decision provided that statements made by Government Ministers may be taken as illustrative of legislative intent as to the interpretation of law.

This extract highlights statements made by Government Ministers along with contextual remarks by other members. The full debate can be read here

This information is provided by Parallel Parliament and does not comprise part of the offical record

Baroness Walmsley Portrait Baroness Walmsley (LD)
- View Speech - Hansard - - - Excerpts

My Lords, I do not always find myself in agreement with the noble Lord, Lord Robathan, but in this case I give him three cheers. He is absolutely right: it has been totally unfair that people have not received the tips they should have. In the past, I have myself asked the question of whether the 10% was going to go to all the staff and, when told that it was not, I refused to pay it and left cash on the table for the waiter. That is one way of dealing with it. The Bill of the noble Lord, Lord Robathan, is another, and I congratulate him and support it.

Lord Johnson of Lainston Portrait The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)
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My Lords, I thank my noble friend Lord Robathan for bringing the Employment (Allocation of Tips) Bill through the House. I agree with him on many things, and particularly on this. I also thank noble Lords from across the House, particularly the noble Baronesses, Lady Blake and Lady Chapman, who spoke in recent debates, for their valuable contributions on the Bill during its passage.

The Government are very pleased to support this important Bill, which deals with tips, gratuities and service charges, which I will subsequently refer to as “tips”. The measures in the Bill will protect millions of workers. We believe that tips should be passed on in full and without deduction to workers. Indeed, many across this House and across the country would regard that as common sense. Tips left by customers are intended to reward the hard work and excellent service of staff rather than topping up the revenue of businesses. The Government are therefore pleased to support the changes made through this legislation and to hear support for it across this House.

I will restate what these measures will do once legislative passage is secured, and what they will not do. Employers will be prevented from making any deductions when distributing tips to their employees, with the exception of those already required or permitted—for example, by tax law. Existing legislation already sets out how tips should be treated for the purposes of tax and national insurance, as the requirements differ depending on whether the payments are made by cash or card and on whether tips are paid directly to workers or are processed and distributed by the business or an independent tronc. No changes are proposed to these tax laws. The majority of businesses, those who already do the right thing in passing on tips in full to their employees, will be largely unaffected. The Bill will ensure a level playing field.

On the statutory code of practice on tipping, when considering the distribution of tips in their organisation, employers will be required to have regard to the statutory code of practice, which will promote fairness and transparency in relation to the distribution of qualifying tips that will include various example scenarios. Employment tribunals will also be required to have regard to the code of practice where relevant in the event that a worker takes a claim against their employer on the grounds of unfair or improper tipping policy or procedure.

We expect that these tipping measures and the code of practice will come into force about a year after Royal Assent is granted to the Bill. This will ensure time for adequate stakeholder input, including a full consultation period, before the final version is brought before both Houses of Parliament for approval. I stress that, from conversations we have had with the industry, it is important that the variabilities to ensure fairness are properly considered, so a proper consultation period is necessary and right.

To conclude, bringing forward this new law will protect millions of workers, among them many of the lowest paid, and give them an avenue to seek remedies. Consumers will be able to rest assured that the tips they leave are going, as intended, to reward the good service and hard work of staff, rather than boosting the revenues of businesses. Additionally, businesses that are already doing the right thing—passing on tips to workers in full without deduction—will be able to be confident that they are not at risk of being undercut by their less reputable competitors.

The Government are pleased to support these new measures and have been glad to see the level of support for them across both Houses during the passage of this Bill. The Government are committed to fairness and to providing opportunities for hard-working people, which is exactly why we are supporting multiple pieces of employment regulation, including this one, on tipping. Ultimately, this Bill is about granting fairness to service workers, who for too long have not had protection from bosses taking tips, and about making sure that customers’ intentions to recognise good service are met. I am personally very pleased to support these new rules. I again thank my noble friend Lord Robathan for his sponsorship of the Bill as it has moved through the House. I also thank my honourable friends Dean Russell and Virginia Crosbie for their sponsorship in the other place and their hard work in this area.

Lord Robathan Portrait Lord Robathan (Con)
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My Lords, it is nice not to be controversial for a change and to have the agreement of the Liberal Democrats. I thank the noble Baroness, Lady Walmsley—I am not sure if it is a compliment or not, but never mind. I am delighted that there is no opposition. It is a very straightforward Bill, the Government support it and I know of nobody who does not. I, too, thank the officials who have worked on this, the Minister, those who have supported it from the other side of the House and my honourable friends Dean Russell and Virginia Crosbie in the other place. Frankly, I do not have anything else to say, for a change. I beg to move that this Bill do now pass.