Employment (Allocation of Tips) Bill

Paul Howell Excerpts

3rd reading
Friday 20th January 2023 Commons Chamber

[Paul Howell (Sedgefield) (Con)]

I thank my hon. Friend the Member for Ynys Môn (Virginia Crosbie) for tabling the Bill, and my hon. Friend the Member for Watford (Dean Russell) for all the tremendous work that was done beforehand. As has been said several times already, this is such an important issue, and it is delightful that my hon. Friend the Member for Watford has been able to put in the time and commitment to get the Bill to the stage it is now at—I hope his heart can stop fluttering soon. Of course, it is always a pleasure to follow my hon. Friend the Member for North Devon (Selaine Saxby).

I said in relation to the previous Bill that I did not have much experience, but I have a little bit more experience of this one. My constituency of Sedgefield is 240 square miles, and contains a significant number of pubs, restaurants and hotels. I do not, unfortunately, have a great deal of awareness—apart from the odd visit—of nail bars or what the quality of service is there; I have had some engagement with the teams, maybe, but that is about as far as I have taken it.

It is fair to say that anyone paying a service charge, or giving a tip, as we would normally call it, expects it to go to the staff, but it is important in this discussion to understand who the staff are. In a multinational hotel chain, the owners are clearly distant, but in a lot of pubs and small restaurants the staff may be the owners. There is some differentiation, in that there could be one person in the family who owns it, and maybe he or she should not be getting the tips, but the other could be working behind the bar or serving the food, and clearly the distribution model—however we make it up—must be fair to them as well.

Certainly, a number of pubs either start as or evolve into quasi-restaurants because the owner is the chef. They have put the effort into the kitchen and they are providing the service of food. When we look at what generates a tip, particularly in a food environment, there are two clear dimensions: the quality of the food and the person-to-person service and delivery. It is important that all of that is considered.

[Dean Russell]

One key component of the Bill, assuming that we get it through today and the Lords agree with us, will be the code of practice, which will effectively set out a 12-week consultation—I believe it is 12 weeks, unless things have changed—with the hospitality industry and more broadly to ensure that there are scenarios that are practicable and work in reality for organisations and staff. Those scenarios can be referred to in tribunals, should things get to that point, but, hopefully, they will give many approaches for businesses, even before the Bill becomes law, to say, “This is the right way to do it.” The Bill does not try to offer a one-size-fits-all model; it is about making sure it works, but at its heart is fairness. If the tip is for the people who have served and cooked wonderful food, then fairness within that organisation means ensuring that that tip is shared fairly across them all, and they can refer to the code of practice as part of that.

[Paul Howell]

I thank my hon. Friend for his very valuable clarification of the direction of travel we hope the Bill will proceed in.

The point was made earlier that the Bill is about making sure people are fairly paid. We have seen in the past people trying to incorporate the tips as part of the justification for a minimum wage. That is wholly inappropriate and I think that is one of the drivers for this Bill, which reinforces the position that people can ensure they get the appropriate pay on their payslip for their work, with tips being a separate scenario that can be discussed and followed through.

We must factor in a number of considerations about where organisations have got to. I do not think many sectors of our economy have been harder hit than hospitality over the last few years, first by covid and then by subsequent problems with labour. That puts pressures on business, and unfortunately some businesses take a step to the side of where their morals should be. This Bill will help to give clarity to that space, so it is absolutely clear that the tips belong on one side of the equation and we do not have a situation, as was mentioned earlier, where businesses are competing with each other, but one is taking the tips and putting it into the profit pot—or the cost-covering pot—and the other is doing the right thing and passing those moneys on to where they belong.

To come back to the point about cash-only or contactless-only methods of payment, another benefit of the Bill is that it provides clarity. The method of payment should not influence whether somebody gets a tip. We have all been to organisations—not in my constituency, as my hon. Friend the Member for Wantage (David Johnston) said; it must have been when I was travelling—that say “card payment only” or “cash payment only”. When a customer walks into an organisation where that direction is given, it makes them think that there is an ulterior motive. Does the organisation want cash so that it does not always go through the books? Does the organisation want contactless so that it has control over all the tips? Those are the two extremes, and both thought processes are probably unfounded in most organisations, but it puts doubt into the customer’s mind as to an organisation’s motives. The Bill will hopefully take that uncertainty away from the customer, so they know that the right thing is being done and the whole tips agenda has no impact.

Many typically small organisations are affected by this issue, so the aggregate number of people involved is incredible; I understand that up to 1 million people could benefit from it and the stats imply that they could get about £200 a year each. That is a significant amount but as my hon. Friend said, I like to think that I tip people reasonably, so I would have thought that they would get significantly more than £200 in the year. There could easily be a significant benefit for the people who are providing excellent services in our organisations, so I commend the progress of the Bill.

My hon. Friend also said that he had tried to go to as many pubs and other places in his constituency as he could, as I do. I hope the House will excuse a slight digression on this, but sometimes that has unintended consequences. I do not think that I am a particularly heavy drinker, but when I go out, I have a couple of beers from time to time. Hon. Members may have seen the “Love Your Liver” campaign in the House earlier this week. I called in and I am now going to my GP, because apparently I need to be checked out. When people go out, they should be aware of the impact on their health, because they would not necessarily know—I do not think there is anything wrong with me, but a scan tells me that there could be, so I need to check it out. I apologise for the digression, but it seemed appropriate to put a shout out for the health agenda.

I appreciate the Bill’s intention, because it is about fairness and it takes away the need for concern and gives employees the legal right to go back and check, if necessary. I endorse the earlier point about the potential for publicising it to make sure that staff and employers are aware that there is a now a line in the sand that has a legal footprint behind it, and it is not just best practice. Of course, best practice attracts the best staff who will attract customers.

Anybody who has worked in any organisation—any manufacturing, trading or sales business—knows one thing above all else: the easiest customers are the repeat customers. If a business can repeat its customers, it will be more successful and sustainable. Why do customers come back? As I said, it is because of the quality of the product, typically food or drink in this context, and the quality of the service. If businesses look after their staff, pay them correctly and allow them to keep the tips that they have earned, they will have a more successful business. I commend the Bill to the House.