Employment (Allocation of Tips) Bill

Jill Mortimer Excerpts

2nd reading
Friday 15th July 2022 Commons Chamber

[Dean Russell]

The hon. Member makes a brilliant point. The idea of the code of practice is to ensure that we do that engagement, and I am hopeful that when we reach out to such organisations, they will help with the media campaign. We need to ensure that everybody knows about the legislation and to highlight that there are businesses that do not pass on tips. In the meantime, I hope that people challenge businesses on that when they speak to them.

The Bill will provide greater transparency for employers and workers in teams regarding how tips should be treated; that will be clear to everyone. It will create a level playing field for the majority of businesses that already pass on tips to workers fairly and transparently, ensuring that they know that other businesses will do the same as they have always done. As we have already mentioned, through the Bill consumers will have the confidence that the full value of their tips will go to workers, and the premise of the Bill is that 100% of tips will go to the workers. The code of practice will agree how that will be shared, and we can turn to that point later.

[Jill Mortimer (Hartlepool) (Con)]

May I speak on behalf of all the backroom staff in hospitality venues? As a teenager, my son worked for many years as a pot washer for very little money, but he always felt really appreciated when he got the little top-up that was his share of the tips. We should remember all those people and how important it is to them to know that they are valued.

[Dean Russell]

Absolutely. I thank my hon. Friend for her contribution. May I also mention the fabulous staff in this place? I know that on occasion, some very kind Members of Parliament do give tips, even though it might not be reported.

I have covered some points around fairness for workers, but I will go into a little more detail. The Bill will create a legal obligation for employers that receive tips directly from customers, or that have control or significant influence over the distribution of tips that workers receive directly, to distribute tips to workers fairly and transparently. The obligation will be attached to the total amount of the qualifying tips paid at, or otherwise attributable to, an employer’s place of business, and the tips must be allocated fairly between workers at that place of business. For example, in the case of a big chain, the tip will go into a pot to be distributed to everyone who works not in the chain, but at that particular venue.

Importantly, the situation will remain the same in cases where employers do not receive, or have control or significant influence over, tips. For example, the Bill will not cover me giving a tenner directly to a waiter or waitress at the end of a meal, as it is clear that it is for them. However, the Bill would come into force if they put the money through the business, perhaps via a credit card payment. Similarly, the Bill will not cover situations where employees already have their own tip jar that they look after, because those tips will not be touched by the business.

Fairness is key to ensuring that businesses and employees know exactly where they stand, but we also need to ensure that there is some flexibility. Every business is different—that is the nature of it. Someone working in hairdressing is going to have a different approach to the way they receive or manage tips from someone who works in a restaurant, bar or hotel. What we are trying to do with the code of conduct is to make sure that that is covered, and I hope that is going to come after this Bill today—

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[Jill Mortimer (Hartlepool) (Con)]

I congratulate my hon. Friend the Member for Watford (Dean Russell) on this important and necessary Bill. Let me echo his sentiments in saying how great it is that after more than two years of lockdowns and restrictions, we are once again talking about visiting our fantastic local restaurants, pubs and other hospitality venues. We have no shortage of those in Hartlepool: Portofino, The Pier Restaurant, Sambuca, The Owl, No 8 and Juniper Lounge—all of them just a short step away from my office—along with LilyAnne’s and the fabulous Railway Café, run by Lesley. I urge anyone who is able to do so to take advantage of this wonderful weather and visit our marina In Hartlepool, because it will be like the Riviera there this weekend.

The employees in all these venues always provide an excellent service and work extremely hard. They deserve every penny of their tips, and I know that their employers—and, indeed, most small businesses—agree with me. Unfortunately, some businesses, usually the larger high-street chains, do not pass on gratuities to their staff. No one wants to see that extra service charge on their Bill and have to wonder whether the money will go to the person who has provided the service. I have done the same as my hon. Friend the Member for Workington (Mark Jenkinson): I have said quietly to the server, “Will this come to you?” and if I see a nervous shrug, I ask for the charge to be removed and I give the person cash. These are often young people, including students who are topping up their incomes by working their way through university or college. We need to ensure that they receive the money that they deserve.

The Bill will ensure that tips are always passed on to employees and divided fairly, and I am proud to be supporting it. As inflation and the cost of living increase, it is more important than ever for hospitality staff in Hartlepool and elsewhere to keep their tips. I realise that some businesses fear that these changes may have a negative impact on their finances—that is why it is so important that we continue to support them through the aftermath of the pandemic, as indeed we are—but I am also aware that businesses which ensure that their staff are properly rewarded for hard work and providing service with a smile will, in the long term, increase their customer base, their revenue and their income. I know I go back to places where I like the staff and get to know them. The bar where everybody knows your name is the one you always want to go to.

Rewarding hard work and good customer service would also ensure a welcoming and friendly atmosphere in our hospitality venues, encouraging more people to come together in our pubs, restaurants and cafés, and thereby strengthening our communities and social fabric. For too long, people have stayed at home watching Netflix, and they need to go out and talk to one another again. It is so important, especially after covid restrictions and being confined to our homes, that we promote measures that enhance our sense of community, which has always been strong in Hartlepool, and I am sure this Bill will do exactly that. This Bill is certainly overdue, and I am glad to be supporting it today.

[Edward Argar (Charnwood) (Con)]

I very much welcome the Bill from my hon. Friend the Member for Watford (Dean Russell). As you will know, Mr Deputy Speaker, he is nothing if not persistent once he has a cause to pursue. I recall that he introduced this Bill in 2021, and as it did not proceed into law at that stage, he is back again and determined to get it through the House on this occasion. I am very happy to be here today to support him in that endeavour.

A lot of the speeches have focused on the hospitality industry—restaurants, bars and similar—but of course, as has been mentioned, this issue is drawn more widely than that and goes across the broader service industry of hairdressing, barbers and so on. A whole range of services are impacted by the issue that my hon. Friend is highlighting today.

Many of our constituents will be unaware, and would be surprised were they made aware, that there is no law—no statute—that directly addresses this issue, and that tips or service charges paid through the business are legally the property of that business. Therefore, it is down to the good will of that business or the approach of that business to ensure that tips get to the staff for whom they are intended. There is no statutory protection of that currently.

Yet as my hon. Friend and my hon. Friend the Member for Kensington (Felicity Buchan) have said, when any of us or any of our constituents go to a restaurant or the barber and pay a tip, we do it because we want to reflect to the members of staff who have provided exceptional service or courteous and friendly service to us that we recognise that service and want to reward them directly for it.

I take the point made by my hon. Friend the Member for Kensington, which is absolutely right, that this is not just about those who are front of house with whom we interact, but about the people in the kitchen, those doing the washing up, and a whole range of others who play a key part in the experience we have enjoyed. It is right that tips are distributed fairly among those who have played a role in our experience. None the less, we expect those tips or service charges to go to those people who have done the work for us, so I very much welcome the Bill.

My hon. Friend the Member for Watford was absolutely right to highlight throughout his speech the word “fairness”, and the Bill goes to the heart of that. It is about fairness to those who are providing the exceptional service and fairness to consumers who believe that the tips and service charges they are paying will go to those individuals. At this point, I should of course pay tribute to the campaigners and to the staff who do the amazing job. I also pay tribute—as the hon. Member for West Ham (Ms Brown), who is not in her place at the moment, highlighted—to Unite the union and others who have been pressing this issue.

When I first entered the House in 2015, this was one of the issues running hot in the news. At that stage, the evidence suggested that about two thirds of employers took some form of deduction from tips or service charges, and sometimes as much as 10%. Of course, there has been progress since then, which is very welcome. However, during the pandemic, people developed behaviours—I do not think they have changed subsequently —of paying for things less with cash and more with cards, therefore putting any tips or additional money through the business in that way. I think the Bill is very timely, and it is the right thing to do.

As has been set out, the Bill creates a legal obligation essentially to allocate tips fairly. Rightly, it does that through a statutory code of practice. That is the right mechanism because it allows for a degree of flexibility and the code to be developed in slightly slower time. There will be complexities, which hon. Members have highlighted, relating to businesses and how to define particular elements, so that is the right approach in such a complex landscape.

The other point highlighted is about people—staff and consumers—being aware. Transparency is vital in this space, so I welcome the inclusion, in the opening remarks from my hon. Friend the Member for Watford, of a written policy that gives people transparency and an understanding of what they can expect, but also—

[Jill Mortimer]

Does my hon. Friend agree that that is one of the greatest problems with this? Relatively recently, we have always had on bills an optional service charge that is anything but optional. Many people pay it without even really looking at it or considering it, and no one knows if the money goes where it is intended to go and should go. The Bill will make the very important change that we need.

[Edward Argar]

My hon. Friend is absolutely right. That goes to the heart of transparency and openness to the consumer but also to those working in this context. My hon. Friend the Member for Watford, in drafting and presenting the Bill, has, as ever, been diligent. He has set out the route to an employment tribunal, which will be an option, and given those tribunals the remedies they need to make redress, should they find a particular employer has not complied with both the spirit and the letter of the Bill and the code of practice.

From my understanding of the Bill, this is hugely important. The Bill has only 15 clauses, but they are important and tightly drafted. It addresses not just the passing on of tips and service charges without their being top-sliced and deducted, but the vital need for fairness in how they are distributed between staff.

I am absolutely delighted to support my hon. Friend’s Bill. It is about fairness to consumers, but most importantly fairness to the staff who day in, day out provide all of us with exceptional service. They have been through a challenging time. It is important that we recognise this in statute. I suspect many businesses do the right thing and it is always a shame when one has to legislate, but it is right, just as with the previous Bill we debated, to do the right thing by those who provide exceptional and courteous service to us. It is about the kind of society we wish to see and the approach we wish to see within that society. I welcome my hon. Friend’s Bill. He has my complete support and I very much hope that it will have a smooth and swift passage on to the statute book.

[Saqib Bhatti (Meriden) (Con)]

I pay tribute to the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Loughborough (Jane Hunt). This is the first time I have had the chance to speak with her at the Dispatch Box. I worked closely with her while chairing the all-party parliamentary group for small and micro businesses. She was the vice-chair and was always a great source of support and an advocate for small and micro businesses. I wish her all the best and long may it continue.

I also pay tribute to my hon. Friend the Member for Watford (Dean Russell) for doggedly pursuing this agenda and pushing the Bill. The west midlands has been known for its great exports over many centuries. You may not know this, Mr Deputy Speaker, but my hon. Friend was born in my constituency, so I am glad to count him as one of the exports that is continuing to do great things in Parliament and for the people of Watford. I thank him for bringing the Bill forward. As my hon. Friend the Member for Charnwood (Edward Argar) said, it is about equity and fairness. My hon. Friend the Member for Watford has pursued this agenda and made sure that the Government recognise the importance of tips in the lives of hospitality workers. I must say, I am a bit surprised that we are even having to have this debate. So many times when I have experienced the great hospitality in my constituency, I have wondered whether my tips actually reach workers’ pockets, and whether a service charge goes to the employees or is for the services that the business—the employer—is providing.

I am pleased that there will be a code of practice to try to address the imbalance in equity and fairness. My hon. Friend the Member for Charnwood said that the majority of businesses do the right thing, and we should recognise that. The majority of hospitality businesses make sure that their staff are taken care of and instil equity and fairness, but clearly that is not the case right across the sector, which is why we need the Bill.

It may well be that we are not a tipping society. Across the pond in the United States, tipping is an integral part of the hospitality sector. When I or my friends have been there, we have always been told, “Please make sure that you tip, because it is part of the income of hospitality sector workers”. It would be remiss of me not to recognise the Government’s great work in getting the national living wage to where it is, but tips are a necessary add-on. Given where inflation is, the Bill is a timely way of addressing issues of equity and fairness.

I have a number of points to raise with the Minister, and I am sure she will address them. On service charges and the code of practice, when I speak to hospitality businesses, they tell me they have not had an easy time over the past few years. It has been incredibly challenging, for obvious reasons—lockdowns are not a friend to many parts of the economy, but specifically to businesses in the hospitality sector. They have had to try to survive, and many have been grateful for the support that the Government have given them, whether business rates relief, bounce back loans or the furlough scheme. Those have all been great assets. I was intrigued to learn that where businesses in the hospitality sector were able to take advantage of the furlough scheme, many of their workers ended up getting second jobs and then did not return to the original employer because they were being paid much more. That has contributed to a significant shortage of workers in the sector—a shortage that was already there pre covid. The issues with skills are of long standing, but they have been made more acute by the decisions that people have had to make during covid.

In that context, a tipping system that is in statute, supported by a code of practice, and embodies elements of fairness, equity and justice—those quintessential British values—will certainly go some way to addressing the acute skills shortage, so it could be an asset to the hospitality sector’s ability to start recruiting again. It is not the only way we need to address the issue, and I am sure the Minister will be working hard to look at that, but it will provide great support. I hope she can provide some clarity on that.

The other aspect of the Bill is service charges. I am less confrontational than my hon. Friend the Member for Workington (Mark Jenkinson), and I sometimes do pay the service charge, not knowing whether I can or should challenge it. Perhaps I should channel my inner Workington man—

[Jill Mortimer]

Or Hartlepool woman.

[Saqib Bhatti]

Indeed. However, the question still stands: if a business deems a service charge necessary for the service that it provides, how will that be addressed? What I do not want to see is an additional line with a new name, adding a new cost that consumers have to pay. That may well undermine the notion that we should tip, because we will already be subjected to another percentage fee. Perhaps that is something that the code of practice will look at.

While I have the Minister’s ear, let me reflect on a roundtable I attended in the past two to three weeks at Nailcote Hall, which is a great hospitality venue. Meriden, bordering Birmingham and Coventry in a beautiful setting in the west midlands, and with the airport and great connections, is a great place for hospitality businesses to flourish. When things are great, it is fantastic to see the hospitality sector thriving, but in the post-covid world, a lot of my inbox has been taken up trying to address the issues that those businesses face. In the early days of covid, that meant trying to get liquidity and loans to help them survive and then thrive, and now it means helping them through the issues that they currently face.

The hospitality sector wanted me to send a clear message to the Government that while they have had a reasonably good period of post-covid recovery, during which people have returned, a lot of work still needs to be done. We should not underestimate the damage that covid has done to the hospitality sector. I return to the point about having clarity in the code of practice. I think hospitality businesses would welcome that guidance.

On that note, I pay tribute again not just to hospitality workers but to the majority of businesses that recognise how important their workers are, how important retention is and how important it is to create an environment in which they are able to recruit. The staff, of course, make up and define a business, and for the businesses that do not have a good environment, their reputation gets out there. I wish we did not need this Bill. Businesses should be doing the right thing. The majority of businesses do; I understand why they do that. I would welcome a meeting with the Minister to discuss some of the issues around the hospitality sector and what more we can do.

Finally, let me reflect on something that my father always said—I say “said”; he still runs the business and adheres to this. He always says, “If you take care of your staff for even one day, they’ll take care of you for a lifetime.” That is certainly the approach that I took in business, and I hope that I can take it forward in whatever roles I have throughout my life.