Where would a Government u-turn on tipping legislation leave us all?

10/05/2022

The absence of an Employment Bill in today’s Queens’ Speech confirms that Government appears to have decided to abandon proposed legislation over tipping and has been met with everything from celebration to outrage. Despite tweets from the Business Minister Paul Scully that the “intention to legislate” remains, it now seems that the proposals, outlined as far back as 2015, will not now see the light of day anytime soon.

Across the sector the reality is that the vast majority of businesses do pass tips and service charges (less those unavoidable costs such as card fees and commissions) to staff, usually via tronc arrangements which benefits those employees as well as businesses and ultimately consumers. Government has consistently supported well-managed tronc systems and the risk of the proposed legislation was that those good businesses would be adversely affected. I, along with many others, spent considerable time in showing Government the dangers to businesses of bad legislation, the good practice that exists throughout the sector, and the changes that many operators have put in place over the last 5 years which mean that any problem that did exist back in 2016 is a much smaller problem today. It is encouraging that Ministers appear to have listened to this and recognised the sector for the steps it has taken.

As with any business sector, however, there will always be a small minority who do not act in line with good practice and who still keep an unreasonable amount (if not all) of tips for themselves and do not treat their staff and customers fairly. Whilst only a minority, it is these businesses who attract adverse publicity which then risks damaging the sector as a whole. That adverse publicity is seized upon by those who would seek to denigrate the sector as a whole, or who have a business interest in causing strife and disharmony by setting one group of staff against another, or who have a product to sell that relies (in no small part) on consumers believing that all hospitality businesses are “bad” and cannot be trusted, or who simply wish to overturn and do away with distribution arrangements that recognise and reward the whole team who deliver the guest experience (including back of house teams) as opposed to just servers – usually out of personal vested interest.

If indeed legislation has been ditched it would be a mistake, in my view, for those businesses treating staff well to simply sit back and forget the issue. That risks allowing bad businesses to continue to act poorly with further ongoing reputational damage. Whilst social media often acts as a focus for those with points to make or grievances to air, it does show that the public do not understand why legislation has been cancelled or why the proposed legislation may not have been the best way to resolve the problem.

Operators want to showcase the best that hospitality can offer in order to retain staff within the sector and attract more of the diminished labour pool to see hospitality as a career of choice. Publicly playing fair with tips is one part of that.

Most businesses actually have a positive story to tell when it comes to tips. They operate fair and visible tronc arrangements that recognise the whole team, and distribute all proceeds after costs. It’s time that we promoted and publicised this to a much greater degree, telling our teams that we are good employers who value and respect them, and telling our customers that they can tip or pay service charge with confidence. The days of keeping quiet have gone – that is what has allowed some to perpetuate a myth that “all businesses are bad and you can’t trust them” which has tarred many others unfairly.

Back in early 2020 I was involved with a number of leading hospitality operators in an attempt to launch an industry-standard kitemark (FairTipShare) that would have been a simple, effective and verified means of businesses demonstrating to their staff and their customers that they abided by certain standards and principles meaning staff would know they were treated fairly and consumers would know they could tip or pay service charges with confidence. The pandemic put pay to the scheme at that time, but it seems to me an idea whose time has most definitely come and which should be resurrected.

There are those who will again see this as an opportunity to call for the end of tipping and service charges. Whilst often well-intentioned, the calls often fail to recognise the very significant additional financial costs that would come alongside such a change, totalling in anything up to £1 billion per annum. Inevitably those costs would be passed on to consumers, adding to the existing pricing pressures and risking being the straw that breaks the dining public’s back. At some point consumers will feel that the next price rise is a price rise too far.

As someone who promotes good practice I was not opposed to legislation, provided it was well-drafted and only targeted those businesses who deserved to be targeted. But that was always going to be a challenge, and news of step back from legislation is perhaps a recognition by Government that they should allow self-regulation to continue to address and remedy the diminishing minority who still do not play fair by their staff or their customers.