Top ‘tips’ for employers on tipping.
There are around 165,000 businesses in the hospitality, leisure and service sectors – and tipping is common.
In 2015 it emerged that many High Street chains routinely took up to 10% of tips paid by credit and debit card.
So what obligations are employers under when handling tips?
1. Tipping come in many forms:
• mandatory service charge
• discretionary service charge
• gratuity paid to the employer as part of a payment via credit /debit card
• cash gratuity paid into ‘tips jar’ etc
• cash payment made directly to an employee.
2. Workers have the right to be paid at least the National Minimum Wage and since 1 October 2009, service charges, tips, gratuities and cover charges cannot be used to make up National Minimum Wage pay for staff.
It is a criminal offence for an employer not to pay National Minimum Wage and employers who discover they have paid a worker below the correct minimum wage must pay any arrears immediately.
3. “The National Minimum Wage: A Code of Best Practice on Service Charges, Tips, Gratuities and Cover Charges” was issued in October 2009 and states that employers should ideally have a policy on tips that includes information on:
• how tips are distributed, eg if a tronc is used
• if cash and card tips are treated differently
• the name of the troncmaster (if there is one)
• any deductions taken from tips
• what happens during leave, eg holidays, sick leave, parental leave.
Change is on its way…
Following the public outcry in 2015, the government launched an investigation into abusive tipping practices across many major restaurant chains and in 2018 the Government announced plans to introduce a new law to prohibit employers from retaining any percentage of employee tips.
If you have any questions, please contact Lauren Pickard at firstname.lastname@example.org or call Lauren on 0114 252 1410.