7th May 2016

Where has all my tip gone?

When you hand over a tip in a restaurant or bar, who gets it and where does it go?

Whether you leave it as cash or pay on your card when settling the bill, most people presume that the tip or service charge goes directly to the smiley waiter who served you your food and drinks. Or you may guess that some goes to the chef and those other staff behind the scenes not involved in directly serving you?

Wrong. This is not always the case. As depending on where you eat, a hefty slice of your tip can end up going to the restaurant itself as some sort of “administration” or “tip handling” fee, instead of it all going in the waiter or waitress’s pocket.

In an effort to stop this happening, the Government has this week reported that tips left by customers should go straight to staff in full, and not to their employers. As a result, it has launched a consultation on its proposals to secure a fairer deal for workers moving forwards.

These proposals include:

  • Making it clearer for customers that tips are discretionary;
  • Preventing or limiting any employer deduction from tips, except for those required under tax law; and
  • Updating the current voluntary code of practice and putting it on a statutory footing to increase employer compliance.

The consultation follows feedback that existing practices are not clear for workers or consumers, and change is needed to better understand how tips are distributed.

The Government’s consultation paper, which is open for responses until 27 June 2016 is here.

Currently there’s no legal requirement for employers to hand over tips to their staff, so this will come as a welcome announcement to the 2 million, or so people working in the hospitality, leisure and service industries.

It’s worth noting that employers are still not able to take account of tips, gratuities and service charges when calculating payment of the national minimum or national living wage. Therefore, tips and the like should continue to be paid in addition to these hourly rates, which are £6.70 for those workers aged 21 to 24 and £7.20 for those aged 25, and over.

So next time you’re out enjoying a nice meal in a restaurant, give some thought to whom and where your tip may go to.


Written by Mike Patterson of Berwins Solicitors.

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