Employment (Allocation of Tips) Bill

Nigel Evans Excerpts

2nd reading
Friday 15th July 2022 Commons Chamber

[Dean Russell]

I thank my hon. Friend for that. He stands up so strongly for workers and for the rights of people across this whole country, but particularly in his constituency. I am very conscious that there is a thing called the tronc system, although I will not go into too much detail on it now because of the time available. Tronc is an arrangement commonly used in the hospitality sector, where an employer delegates the collection, allocation and distribution of tips to a person or persons known as a “troncmaster” or tronc operator. The Bill does not seek to regulate the operators of independent tronc systems, which are commonly used by many businesses already. However, I raised this matter when I was talking through how to make this Bill the best it can be and I found that some stakeholders have been concerned about whether a business could then put pressure on a troncmaster to do something that is unfair. So, to mitigate that risk, under this Bill workers can bring an employment tribunal claim if an employer’s use of an independent tronc is not fair. I hope that that will capture any concerns on that front.

As we have just discussed briefly, another aspect of fairness is ensuring that there are no deductions from tips. So at the core of the Bill is the creation of a legal obligation for employers to distribute all tips, gratuities and service charges to workers, without any deductions. When customers pay service charges, they expect that money to go in full to the staff and to the individuals they have asked it to go to. Sadly, some employers retain part or the whole service charge without passing it on to their workers, so this Bill will deal with that. Some hon. Members have asked me whether this legislation will also cover credit card deductions and administrative costs, and some businesses have raised that issue with me too. Since 2018, payment processing fees cannot be passed on to consumers. In line with that, employers will not be able to deduct payment processing fees from tips––that also includes mandatory and discretionary service charges which are added automatically on to customers’ bills by some hospitality venues. My hon. Friend the Member for Workington (Mark Jenkinson) will be relieved that that will no longer be the case, as he has probably had arguments on that front in the past. Administering tips should not impose significantly on a business’s operating costs, but that credit card admin charge might be significant for an individual. Two or three payments can be significant for an individual when we are talking about tips. So, again, this is about fairness; businesses do not incur a significant cost in respect of this money from tips, but if it were taken off the staff, it would be significant for them. It is important to include that provision in the Bill and to put what I have just set out on the record.

Ensuring that tips are passed on to workers in full, with no deductions by employers, will make a real difference to workers’ lives, while not creating a burden on businesses. As I noted earlier, an important practical aspect of the Bill will be the code of practice, which I will expand upon now for a few moments. The Bill includes provisions for the Secretary of State to issue a statutory code of practice, which will promote fairness and transparency in relation to the distribution of qualifying tips, and help tribunals determine whether it is fair for an employer to make certain tronc arrangements. Employment tribunals must have regard to relevant provisions of the code when determining whether an allocation of tips or making of certain tronc arrangements is fair. The code will consider some of the factors that may be relevant to fairness and will provide a number of examples and real-life scenarios that exemplify fair tipping practices, to help reflect the myriad circumstances in which employers can handle tips in an acceptable fashion. The hon. Member for Neath (Christina Rees) mentioned engagement, so let me say that the code will be published in draft and consulted on before the relevant sections of this legislation come into force. The code will also require approval from both Houses of Parliament. I hope that that reassures colleagues across the House that there will be scrutiny and that we will ensure that it is covered fully. The defining principles of the Bill will need to capture the nuances of fairness. As I have mentioned, I want to engage widely to ensure that the code of practice really works. I welcome anyone reaching out to me after Second Reading. If the Government and the Minister support the Bill going through to the next stage, and the House joins us in that approach, I will be really keen to engage and hear hon. Members’ points.

One of the core issues is remedies and enforcement. Crucially, the Bill will be enforced by workers through the employment tribunal system and will provide employment tribunals with remedies where an employer has made deductions from tips or has not allocated tips in a fair and transparent way. If an employer does not allocate tips fairly among workers, the employment tribunal can make an order that does one of three things: require the employer to revise any allocation of tips that they have made, recommend that the employer deals with tips in a certain way, or require the employer to make a payment to one or more workers so that they receive the tips that they should have received.

The employment tribunal may additionally compensate workers by up to £5,000 for related financial loss attributable to a breach of the provisions. Workers will also be able to make a complaint to an employment tribunal if their employer does not keep sufficient records relating to tipping practices; the tribunal can order the employer to compensate workers by up to £5,000. It is worth noting that workers must consult ACAS before bringing forward a claim. The majority of employment disputes are settled before they reach an employment tribunal.

I would like it to be absolutely clear that nothing in the Bill will make changes to taxation for employers or employees. It is purely about employees’ rights and workers’ rights.

I will conclude my remarks because I want to hear the fantastic speeches that are no doubt coming up. I thank the Minister and her predecessor, my hon. Friend the Member for Sutton and Cheam (Paul Scully), for their incredible support with the Bill; I hope that I can convince colleagues to get it over the line today. I thank everyone who has helped me to introduce it to the House: hon. Members past and present, constituents and my fabulous Watford businesses and residents, who have repeatedly raised the importance of the issue. As we are all aware, the private Members’ Bill process is fragile, so I am keen to work with all hon. Members, all organisations and everyone I can to make sure that the Bill works. I urge the Minister to support it.

[Mr Deputy Speaker (Mr Nigel Evans)]

We have all learned a new word today: “tronc”, which I will try in Wordle later.

--- Later in debate ---

[Wes Streeting (Ilford North) (Lab)]

On a point of order, Mr Deputy Speaker. The Met Office has issued its first ever red warning for the heatwave that the country is likely to experience on Monday and Tuesday next week. Has the Department of Health and Social Care given you any notice of its intention to make a statement to this House about the health consequences for the public, not least given that this red warning means there is likely to be a risk to life?

Of course, our newspapers, television screens and airwaves are full of reports of overwhelmed ambulance services and accident and emergency departments. Given that the Secretary of State for Health and Social Care failed to answer my urgent question on Wednesday, I would have thought that invisible man might make an appearance today to advise and reassure the public that our public services and emergency services will be able to cope in the light of this emergency.

[Mr Deputy Speaker (Mr Nigel Evans)]

I thank the hon. Gentleman for his point of order, and for giving me forward notice. I have been given no notification that there will be a statement from the Department of Health and Social Care, or any other Department, today. Should that change, the House will be informed in the usual manner via the annunciators.

It is timely that the hon. Gentleman makes this point of order, as people should take advice in these unusual circumstances. People should take water with them when they travel, they should make sure there is plenty of ventilation and they should seek attention if they are feeling unwell. I thank him again for his point of order.

--- Later in debate ---

[Mr Deputy Speaker (Mr Nigel Evans)]

I should have said this during the last debate, but I will say it now: I welcome the Minister to her new role.

Employment (Allocation of Tips) Bill

Nigel Evans Excerpts

3rd reading
Friday 20th January 2023 Commons Chamber

[Kevin Hollinrake]

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.

[Mr Deputy Speaker (Mr Nigel Evans)]

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.

[Virginia Crosbie]

With the leave of the House, I would like to thank all hon. Members for their contributions today. In particular, I emphasise the work of my hon. Friend the Member for Watford (Dean Russell) and thank him for his kind words. He also taught us a new word, “snollygoster”. We heard about workers’ rights and he emphasised us working together as a House.

The hon. Member for Reading East (Matt Rodda) talked about the importance of the Bill for university towns such as Reading. My hon. Friend the Member for Cheadle (Mary Robinson) mentioned a campaign to make sure people know about the measures and how we have amended the Employment Rights Act 1996. My hon. Friend the Member for Wantage (David Johnston) waxed lyrical about Christmas tips and how he plans to visit all his pubs. We had a fantastic romp through all the fantastic places to visit and eat in the constituency of my hon. Friend the Member for North Devon (Selaine Saxby).

My hon. Friend the Member for Sedgefield (Paul Howell) highlighted how important it is that the Bill will help businesses to look after their staff. My hon. Friend the Member for Clwyd South (Simon Baynes) grew up in the Lake Vyrnwy Hotel, a wonderful, wonderful hotel. He paid tribute in particular to Kate Nicholls. From my hon. Friend the Member for Leigh (James Grundy), we had the great image of a scene from “Reservoir Dogs” and the culture of tipping in the US. My dog sends her best wishes to my hon. Friend the Member for North East Bedfordshire (Richard Fuller), who talked about impact assessments and small businesses. Lastly, the shadow Minister, the hon. Member for Putney (Fleur Anderson) shared her experiences of not being able to drink her tips and the significance of the support of unions and UKHospitality.

I would like to end by thanking the Minister for signalling the Government’s continued support for the Bill. I hope hon. Members in all parts of the House can agree that this is an essential piece of legislation, which will help to promote fairness and transparency to ensure that workers receive the tips they earn. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read the Third time and passed.

[Mr Deputy Speaker (Mr Nigel Evans)]

Congratulations, Virginia Crosbie and Dean Russell.