Employment (Allocation of Tips) Bill

Debate between Lord Johnson of Lainston and Baroness Walmsley

3rd reading
Friday 21st April 2023 Lords Chamber

[Baroness Walmsley (LD)]

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.

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

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.