Consultation on Tips and Gratuities

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The Department for Business Innovation and Skills have called on interested parties to give evidence on the current system of tips and gratuities and whether this is transparent enough. The payment of tips, gratuities, cover and service charges is prevalent in a number of sectors and concerns have been raised in the hospitality sector in particular as to how these are collected by employers.

Information is being gathered to look at how much of the tips and gratuities go to the employee. The current practice is that payments in cash tend to belong to the employee and any tips that are paid to the employer (i.e. on the card payment) belong to the employer. There is then a local agreement in place as to how these are distributed between employees, if at all.

The Government want to see if any action needs to be taken against the employers that retain the tips and gratuities paid to them other than for card processing charges and payroll costs. At present, tips and gratuities do not count towards the national minimum wage and given the proposed increases in this area, this may be another rationale for the Government wanting to look at the matter in more detail.

For information and to respond the call to action, click here.

Written by
Edward Aston
5th October 2015