Employment (Allocation of Tips) Bill

Debate between Virginia Crosbie and Mary Robinson

3rd reading
Friday 20th January 2023 Commons Chamber

[Virginia Crosbie]

My hon. Friend makes a very good point. People—particularly young people—who are looking for employment in the hospitality sector will look at it as a whole package when considering what it means for them and whether they will be able to earn enough. Tips are a vital part of their calculation when they are looking at taking such roles.

Workers expect the tips that have been given in recognition of their hard work and good customer service to be given to them in full. The Bill promotes fairness for workers by creating a legal obligation to pass on tips to workers, in full, with no deductions other than in very limited circumstances such as those required under law. It will provide protection across all sectors, but focuses on changing employment law to bring increased protection for workers in industries in which tipping is common. An additional benefit of this legislation is the increased confidence that consumers will have that the tips they choose to leave in recognition of good service will actually go to the workers for whom they are intended, and are not unfairly pocketed by bosses.

In determining how to allocate tips fairly, the employer must have regard to the relevant provisions of the upcoming statutory code of practice, which will set out principles of fairness and transparency relating to tips. That code of practice is necessary to describe—in more detail than a Bill can—the different circumstances that are likely to be “fair” and “unfair”. A number of examples will be provided to illustrate what fair tipping practices look like. Those examples are not included in the Bill, as that could limit flexibility for employers. To issue a code of practice, the Secretary of State must consult the Advisory, Conciliation and Arbitration Service, and publish a draft to allow stakeholders to make representations, before laying the draft before both Houses of Parliament for approval. The code of practice will be statutory and have legal effect, meaning that it can be introduced as evidence to employment tribunals considering whether an employer is in breach of the legislation.

There is one main theme running through the core of the Bill: the creation of a legal obligation on employers to pass on tips in full to workers. Giving workers 100% of tips means that there can be no deductions from tips by an employer other than in the limited circumstances required or permitted by other law, including tax law. Prohibited deductions include, but are not limited to, card transaction fees and administration costs. Some employers may use a tronc system to help with distributing tips. Under that system, which is mostly used in the hospitality sector, an employer delegates the collection, allocation and distribution of tips to a person or persons known as “troncmaster” or “tronc operator”. It is important that we retain flexibility for employers to choose how to distribute tips, as long as that distribution is fair.

Transparency is a crucial part of the Bill, and information plays a significant role. However the tips are allocated, the Bill provides workers with a new right to make a written request to access the relevant parts of their employer’s tipping records. That allows workers to seek redress if they are not being treated fairly by gathering evidence and bringing a claim to an employment tribunal where necessary. The Bill will be enforced by workers through the employment tribunal system, and provides employment tribunals with remedies for situations in which an employer has made deductions from tips or has not allocated tips in a fair and transparent way. Workers will be able to present to an employment tribunal complaints about an employer failing to comply with its obligations to allocate tips fairly or failing to do so in time. The Bill also allows agency workers to present complaints. The limitation period for such complaints is 12 months.

Workers’ rights to bring forward such claims are at the core of the Bill because employment rights need to be underpinned by effective enforcement. The tribunal can make a range of orders, including orders requiring the employers to revise any allocation of tips that they have made or to make a payment to a worker of up to £5,000 in compensation for consequential financial loss. That will help those workers who have not been fairly treated when tips have been distributed.

The Bill will have a limited impact on employers who already handle tips fairly and transparently. It is not expected that there will be significant change or cost to business in complying with the new rules. Employers will still have flexibility on how to design their tipping policies, how to maintain records, and how they communicate their policies to workers. In addition, when workers request information, employers will have a period of four weeks to fulfil that request.

I will conclude by giving a final overview of the Bill. It sets out the right that tips should go to the workers who earn them, and that those tips should be distributed both fairly and with transparency.

[Mary Robinson (Cheadle) (Con)]

I am grateful to my hon. Friend for giving way as she nears the end of her speech. She has made a very powerful case on behalf of workers who have been missing out on their tips up until now. I am keen for people to know about this Bill—workers, and also people like us who will go into a restaurant or a place to eat or to have a drink and ask, “Will you keep the tips?” Those people need to know for sure that the worker will be able to keep the tip, so a media campaign to support the Bill would be really helpful.

[Virginia Crosbie]

My hon. Friend makes a fantastic suggestion: it is incumbent on all of us and the sector to communicate the existence of the Bill. We have the likes of Kate Nicholls at UKHospitality supporting us, and the support of the unions; so many people are right behind the Bill, supporting those workers who play a vital role in such an important sector, so we will be seeing it communicated. As my hon. Friend the Member for Watford has previously stated, these Friday sittings are very special, and it is important that people know that in this House there has been an opportunity for us to put in place legislation that stands up for the rights of the workers.

As we are all aware, the process of taking a private Member’s Bill through the House is a fragile one, and I am thankful to all Members for working together to make sure that this Bill reaches its final reading in this House before progressing to the Lords. I take this opportunity to thank the Government again for supporting the Bill, especially Ministers at the Department for Business, Energy and Industrial Strategy, and I am grateful for the support of Members of this House while it has been moving through its stages—Second Reading, Committee, and now finally Third Reading. I firmly believe that the Bill gives us all a great opportunity to bring about real change, which will have an impact on workers who receive tips across all of our constituencies.