The Minister of State, Department for Business and Trade (Kevin Hollinrake)
I beg to move,
That the draft Code of Practice on Fair and Transparent Distribution of Tips, which was laid before this House on 22 April, be approved.
The code of practice, which I will refer to as the code, will give legal effect to standards in the allocation and distribution of tips, gratuities and service charges, and transparency surrounding the keeping of records and the retention of written tipping policies. For brevity, I will refer to tips, gratuities and service charges as tips for the rest of today’s debate. Passage of this code will signal a landmark moment in our protection of workers’ rights. For the first time, the Government are ensuring cast-iron clarity about where tips are going once they have been paid, and setting a new standard for how tips should be treated.
James Gray (North Wiltshire) (Con)
The Minister said that, for brevity, he would consider tips, gratuities and service charges all to be tips, but surely service charges, which are a set charge against some practice or service, are quite different from tips, which are for fun or voluntary. Gratuities come somewhere between the two, do they not? Could he kindly enlarge on the definition of those three things?
Kevin Hollinrake
It is our position that they amount to the same thing. We know from customer behaviour that when a customer sees a service charge on their bill, they will usually not tip at that point because they believe that the service charge is a tip. We feel that that is in the same category, which is why we have categorised them together in this instance.
The Employment (Allocation of Tips) Act 2023 was a relatively simple piece of legislation, but one with an important purpose. Following the justified public examination a few years ago of the spectacle of some businesses retaining significant percentages of tips or even keeping them altogether, the Government committed to backing a private Member’s Bill on tipping. The law mandates that all qualifying tips must be passed on to the workers who earn them, rather than being retained by businesses, and it sets out that these tips must be allocated and distributed in a fair and transparent manner.
I reiterate my appreciation, which I set out at this Dispatch Box earlier this year, for the cross-party support that the primary legislation engendered, and for the positive and constructive tone in which all the parliamentary stages were conducted. I want to extend further thanks in particular to the original Bill’s sponsors, my hon. Friends the Members for Watford (Dean Russell) and for Ynys Môn (Virginia Crosbie), and subsequently Lord Robathan in the House of Lords. Today we are another step closer to bringing these important measures into effect.
It was remarked at the time that the detail was crucial, and we elaborated on that detail in December with the publication of the draft statutory code of practice on fair and transparent distribution of tips. I am grateful for the large volume and quality of the responses we received during the public consultation that followed. Everyone who provided feedback, whether via an online survey, through an email response or in a meeting with officials at my Department, should know that their views have been considered carefully. Responses have been used to amend and enhance the code, and will continue to inform the communications and support for businesses implementing these measures.
We were pleased to lay the updated code of practice before Parliament on Monday 22 April. The code was also published on gov.uk alongside a full Government response to the consultation, which provides more detail on the feedback received from businesses, workers and other stakeholders. I trust that right hon. and hon. Members have had, or will have, the opportunity to study the detail of the code in their own time, but I will briefly set out its provisions here today.
The code of practice contains summaries of the key intentions of the Act. The code sets out the scope of this legislation, emphasising that it covers all qualifying tips—that is, employer-received tips and worker-received tips over which an employer exerts control or significant influence. These measures apply to every sector and across England, Scotland and Wales. The code goes on to provide more detail on the need to maintain fairness in the allocation and distribution of tips. Rather than being prescriptive and potentially burdensome to employers, the code articulates key principles for employers to consider, protecting both the rights of workers and flexibility for a variety of approaches from businesses.
The code helps employers to engage in constructive and positive consultation with their workers, and helps to minimise the risk of discrimination, which may be indirect or unintentional, if due care is not taken. The code sets out that employers need to uphold transparency in the handling of tips. This includes keeping a written tipping policy that is clearly communicated to all affected workers. This requirement also includes retaining accurate tipping records to which workers have the right to request access. One thing to note is that this need to maintain a written tipping policy and make it available to workers does not apply to businesses that receive tips only on an occasional and exceptional basis.
Finally, the code expands on how to resolve conflicts that arise between employers and workers. While early and internal resolution of issues is preferable for all involved, workers may consult ACAS for impartial advice and assistance in resolving problems. The code informs workers about how an unresolved dispute may be escalated to an employment tribunal.
James Gray
I am listening to the Minister carefully. I am sorry that I am not as familiar with the original Act I should be, and I apologise if I ask a foolish question as a result. He mentioned a moment ago that the code of practice would not apply to industries in which tipping occurs only rarely. Will he expand on what those are? For example, if I tip a taxi driver, would it apply to that? Obviously not. If I tip a waiter in a restaurant because he has been particularly helpful to me, why should that be shared with other people in the restaurant? To what sort of industries would the code not apply?
Kevin Hollinrake
As I said earlier, that provision does not apply to an industry or organisation that receives tips on an occasional or exceptional basis. An example would be a Christmas box or a Christmas present for somebody, or an industry that is not used to getting those kinds of gifts. My hon. Friend talked about the taxi industry, which is an industry in which people regularly receive tips. He also talked about a situation where a customer gives a tip directly to a worker. That tip can be kept by the worker if it is given directly to that worker and is not in the control of the employer. That is the difference: a tip given directly to somebody in a restaurant or some other place can be kept by that individual. We would expect that to be set out in a policy at employer level.
I want to take this opportunity to place on the record the Government’s gratitude to ACAS and all those involved in the tribunal system for their continued diligence on tipping and many other matters of employment law. Overall, the Government are proud today to endorse the approval of this code of practice. Following approval by this House and by the House of Lords, the code and the other measures in the Act will come into force on Tuesday 1 October.
With this code of practice, the Government are righting a wrong, delivering a level playing field for businesses and continuing our proud record of standing up for and defending the rights of workers. I commend the statutory code of practice on fair and transparent distribution of tips to the House.
David Linden (Glasgow East) (SNP)
It is genuinely a pleasure to follow the hon. Member for Watford (Dean Russell). I thank him and congratulate him on the private Member’s Bill that led to this code of practice coming to the Floor of the House. It is a small but significant step forward in improving workers’ rights. Regardless of our political differences—I suspect there are many—I have always found the hon. Gentleman to be kind, thoughtful and dedicated to public service, and I am very grateful for that. It is therefore no surprise that having won the equivalent of the parliamentary lottery, he chose to bring forward legislation that commands such cross-party support, and I thank him for that.
I will make reference to the briefing issued by Unite the union later in my remarks, but at the outset I declare my own membership of Unite, although I should be clear that I have no particular financial interests to declare.
One of the most frustrating aspects of the 2019 to 2024 Parliament has been the lack of significant progress on improving employment law more generally. Yes, there have been piecemeal bits of legislation, such as the Bills brought forward by the hon. Member for Watford, my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) and the hon. Member for North East Fife (Wendy Chamberlain), but they have all come forward as limited Back-Bench Bills. It is undeniable that a vacuum was created for these private Members’ Bills to move forward due to the sheer absence of the substantial Government employment Bill that many of us expected. Indeed, we were promised such a Bill on no less than 20 occasions by Ministers. It is now seven years since the Taylor review and still no action has been forthcoming from the recommendations of that report.
Kevin Hollinrake
I am sure the hon. Gentleman would like to correct the record. A number of recommendations in the Taylor review have been implemented, not least the right to request predictable terms and conditions, which went further than the recommendations in the review. Will the hon. Gentleman acknowledge that fact?
Kevin Hollinrake
I thank hon. Members for their contributions to this debate in which we are seeking to ensure that the draft code of practice on fair and transparent distribution of tips is approved.
I will turn now to the specific issues raised. The shadow Minister talked about engaging with the sector, which is very important. I can tell him that we engage regularly with organisations such as UK Hospitality, the British Beer and Pub Association and the British Institute of Innkeeping on these matters and have been doing so for many months, as we want to make sure that their views are heard. The non-statutory guidance that we will be bringing forward should provide more help for those organisations to comply with the important provisions of this legislation.
The shadow Minister asked whether we would review the policy on a regular basis. We will obviously keep all these matters under review, and the guidance should help to inform the sector about requirements in terms of both employees and businesses. It is hugely important that we do so. He asked whether a person could take a claim forward to an employment tribunal for unfair dismissal. Clearly, employment tribunals are there to ensure that workers can assert their rights if they feel that their rights have not been respected, so we would definitely expect an employment tribunal to hear such a case.
The shadow Minister asked about tipping by digital apps. We see this as a new phenomenon and an interesting development, enabling the customer to be able to tip an individual using an app, QR code or whatever, and we will not stand in the way of that. Where a tip has been given directly to a member of staff, it is clear that that tip should be kept by the member of staff. The app is there to allow flexibility in the implementation of the code or the guidance, rather than allowing businesses to avoid their clear obligations.
The shadow Minister asked about payments and why they are paid the following month. I think it is reasonable to allow a business to be able to calculate the amount of tips that are received in a month and then pay those out to workers in the month following. We think that that is a reasonable balance to strike. He asks why we are taking another five months to put this legislation in place. Clearly, we want to ensure two things—that we get this right and that we respect some of the pressures that exist in the hospitality sector, which has been through a difficult time, with increases in the national living wage, the cost of living crisis and the covid pandemic. We are trying to make sure that we take the sector with us, rather than impose unfair new burdens on it. We do not think that these measures are unfair, because we know that the majority of businesses would adopt these kind of rules even without this legislation.
The hon. Member for Glasgow East (David Linden) seemed to imply that we on the Conservative Benches were going to use Brexit to improve workers’ rights. I am always keen to improve workers’ rights, and we have done so in this Parliament, but I remember his party clearly saying that Brexit would be a bonfire of workers’ rights and that certainly has not been the case.
David Linden
Does the Minister consider that workers’ rights have improved? If he does, why is it that trade union organisations across Europe recognise that the UK has some of the worst employment rights across Europe?
Kevin Hollinrake
Yes, those rights have got better. We have introduced legislation that covers the right to request flexible working, neonatal care leave, carers’ leave, protection to cover redundancy during pregnancy and return to work, the right to request predictable terms and conditions, the tipping Bill, and shared parental leave. All those things have been introduced, or supported, by this Government. We see those protections not as an opportunity to create a wedge issue, but as the right thing to do by our workers.
David Linden
Is the Minister seriously trying to tell the House that the former Secretary of State, the right hon. Member for Welwyn Hatfield (Grant Shapps), did not relish the opportunity to bring forward the Strikes (Minimum Service Levels) Act 2023, seeing it as a wedge issue that would cause trouble with the Labour party? Come on!
Kevin Hollinrake
That is a refrain that we constantly hear from the SNP. To be fair to the hon. Gentleman, he did refer to ensuring that we worked alongside hospitality on the guidance, but apart from that, there was nothing in his remarks about the needs of business, and the legislation is about the needs of business. The strikes that affected this country, particularly at the end of last year and in the year before last, cost the hospitality sector around £3 billion. That is why we legislated as we did, and we feel it was the right thing to do.
The hon. Gentleman would do well to reflect further on the needs of business as well as the needs of workers. We believe that there is a balance to be struck, and he has got that balance wrong in Scotland. Hon. Members need not listen to me; just look at the numbers. The most recent figures for economic growth in Scotland over the 10 years from 2011 to 2021 show Scotland’s cumulative GDP growth at 7.2%, England’s at 14.9% and the whole of the UK’s at 12.9%. SNP MPs would do better to go back to their nation and constituency and drive economic progress forward.
My hon. Friend the Member for Watford (Dean Russell), who has done such good work in this area, talks about fairness. I know he stands up for fairness, and for Watford; I have seen the amazing montages of all the times that he has mentioned Watford in this Chamber. He deserves plaudits for his work. He says that he was lucky, but as the great Gary Player said, the harder you work, the luckier you get. The success that my hon. Friend has been an instigator of today is due to his hard work and determination. He talks about what we have done on communications, working with employer groups, employee groups and the hospitality sector. Yes, we do that—we work with trade unions, ACAS, UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping and others to ensure that the code of practice and the guidance that will follow will leave them fully cognisant of the requirements on the sector—a sector that is so important to our economy.
My hon. Friend the Member for North Wiltshire (James Gray) said he does not like giving tips. He is free not to give a tip if he does not feel it is appropriate, but most people would say that for good service, they would be prepared to provide a tip. The key point of this legislation is that that tip should be retained by the individuals who provided the service.
James Gray
May I correct the impression my hon. Friend has given of what I said? I did not say that I do not like giving tips. I like giving tips—I am quite a generous tipper, I think. However, I wish I did not have to. I wish people were paid enough to make tips unnecessary. That was the point I was making.
Kevin Hollinrake
My hon. Friend makes a very good point. Of course, we have increased the national minimum wage by record amounts this year to try to make sure that people get paid enough. It did surprise me to think that he would not be a generous tipper, because he has been generous in all my interactions with him.
Finally, my hon. Friend the Member for Ynys Môn (Virginia Crosbie) talked about her constituents and the benefits that the code will bring—£900,000 in her constituency, I think she said. She does a great job for her constituents. I must say that my daughters are both pretty pleased with the code as well, as they both work in local establishments.
When the code and other provisions on tipping come into force in October, we will right a wrong and ensure that tip money goes where it should: to the workers who provided the service. We will continue to monitor the operation of the code and the major industries that it covers, and we will not hesitate to amend it—with parliamentary approval, of course—if necessary. I can also confirm that additional, non-statutory guidance will be published before the code comes into force, to provide further background and help employers to remain compliant with the requirement. I commend the motion to the House.
Question put and agreed to.
Resolved,
That the draft Code of Practice on Fair and Transparent Distribution of Tips, which was laid before this House on 22 April, be approved.
Business of the House (Today)
Ordered,
That, at this day’s sitting, the Speaker shall put the Question necessary to dispose of proceedings on the Motion in the name of the Prime Minister relating to War Graves Week not later than 7.00pm or not later than three hours after their commencement, whichever is the later; proceedings on that Motion may continue, though opposed, after the moment of interruption; and Standing Order No. 41A (Deferred divisions) and provisions of Standing Order No. 9(3) relating to motions that this House has considered a specified matter shall not apply.—(Mr Gagan Mohindra.)