New UK tipping law for restaurants, hairdressers, pubs from Tuesday

Taxi firms, hairdressers and hotels, as well as restaurants, pubs and cafes, will be affected by the new rules which launch on Tuesday this week.

Restaurants may hike prices to cope with a new tip-sharing law from October. Taxi firms, hairdressers and hotels, as well as restaurants, pubs and cafes, will be affected by the new rules which launch on Tuesday this week.

These companies will be banned from withholding tips paid by customers – whether in cash or by card – and service charge payments from workers. Kate Nicholls, the chief executive of UK Hospitality, says businesses have “been gradually getting ready for this” and moving towards a code of best practice endorsed by unions.

“Those that have been using the service charge to pay staff or to partly offset their wage bill are still going to have to pay their staff, but now won’t be able to draw on this cash fund,” says Saxon Moseley, head of leisure and hospitality at consultancy RSM.

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“And in that scenario, margins will be hit, in some cases fairly drastically.” Michael Powner, employment partner at Charles Russell Speechlys, says reaching a deal is often a difficult process and has spoken out over the change under the new Labour Party government.

He said: “Employers need to ensure that what is agreed is ‘fair’ and that there is rational reasoning in place, while avoiding any potentially discriminatory rules.” Bryan Simpson, who organises hospitality staff for the Unite union, has also spoken out.

He said some were “deliberately misinterpreting the new fair tips legislation to suit business needs rather than the workers”. “We will be doing everything in our power industrially, politically and legally to ensure that any unfair tipping policy is challenged,” he said.

The law is designed to boost the earnings of about 2 million waiting staff and other hospitality workers. The law is being introduced by the government on Tuesday, more than eight years after a ban was first mooted.