Employment (Allocation of Tips) Bill

Chris Stephens Excerpts

2nd reading
Friday 15th July 2022 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Jane Hunt)]

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 (Glasgow South West) (SNP)]

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]

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]

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]

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

Chris Stephens Excerpts

Committee stage
Wednesday 12th October 2022 Public Bill Committees

[David Linden (Glasgow East) (SNP)]

It is a great pleasure, as ever, to serve under your chairmanship, Ms McDonagh. I congratulate the hon. Member for Ynys Môn on taking the Bill forward on behalf of the Minister, the hon. Member for Watford. I congratulate him in particular on rising to ministerial office; I have always found him incredibly thoughtful since he entered the House in 2019. I never quite thought it would be a Conservative Member bringing forward legislation to strengthen employment rights, so I am grateful to Comrade Russell for doing that. I only hope that the current Leader of the Opposition can bring himself to start supporting employment rights, because he seems to be on a bit of a slippery wicket on that one.

I want to offer my support and that of my party for the whole Bill, from clauses 1 to 15. My constituent, Joan Tomson from Carmyle, was in touch with me in the summer about this specific issue of how to protect tips for staff. I am fortunate to have in my own constituency excellent restaurants such as Kastriot’s in Baillieston and Gia’s of Shettleston. They would not dream for a minute of trying to steal their staff tips, but this Bill addresses the bad employers out there who behave in a completely unacceptable way. It is right that we bring forward legislation to bring them to heal.

It will come as no surprise to the Minister when I say that the Government need to bring forward a full employment Bill. It is noticeable that we are having to bring forward piecemeal bits of legislation, such as the excellent Bill before the Committee or, indeed, the legislation introduced by my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) on neonatal leave and pay. These are hard-won battles that we are having to fight on employment rights, but if anything has been taught as a result of the shameful actions of British Airways and P&O Ferries—

[Chris Stephens (Glasgow South West) (SNP)]

Will my hon. Friend give way?

[David Linden]

I am happy to give way to my hon. Friend.

[Chris Stephens]

Does my hon. Friend agree that this Bill and the other legislation that he talks about have the support of the trade union movement, which is playing a vital role? The rhetoric that we sometimes hear from Ministers is not the rhetoric that we want to hear. We want to see a partnership with trade unions so that we can shape employment legislation that deals with insecure work and unfair conditions.

[David Linden]

This is probably an appropriate juncture to declare my membership of the Unite trade union. I agree with my hon. Friend; he is right to put that on the record and it is topical because at the weekend the wonderful Rozanne Foyer from the Scottish Trades Union Congress talked at the SNP conference about how refreshing it was that the Scottish Government very much view trade unions as partners. I am sure that, given the doughty leadership of Comrade Russell as the Business Minister, the trade unions will find an open door from this Government, but my hon. Friend is right to put that on the record.

As much as I seek to poke a bit of fun at the Minister, today is a day for us to work across party lines. This is an excellent piece of cross-party legislation and I will be glad to see it hopefully pass through Committee, through the remaining stages in this House and then over to the noble Lords, and receive Royal Assent.

--- Later in debate ---

[Chris Stephens]

No, I am fine.

[The Chair]

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.

--- Later in debate ---

[Dean Russell]

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]

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]

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.