I beg to move, That the Bill be now read a Second time.
I am incredibly pleased that we have time today to debate this important issue and Bill. I am the Member of Parliament for Watford, which has a thriving hospitality and service sector. That means that many of my constituents, and those from surrounding areas, work in roles where tips, gratuities and service charges are given to them—for the simplicity of my speech I will refer to those things as tips from now on, rather than give the full list.
For individuals who work in those roles, tips are an important part of receiving a thank you, and in many cases they are a token gesture from customers. Across Watford, not only do many people working in hospitality receive tips, but probably everyone—we are a very generous constituency—will have given a tip over the past few years. I was shocked when I found out, especially during the summer period after lockdown when we could reopen restaurants and were able to go back out and give tips, that hospitality workers could not necessarily guarantee that they could keep them. I think most people would be shocked to know that if they gave a tip through the business—via a credit card, say, as is increasingly more prominent and popular—there is no guarantee that the person or team they gave it to would receive it.
Of course, in most instances businesses are fair and kind and ensure that those tips get to the staff who were given them. Sadly, however, we know that there are always those who are unscrupulous and unfair and will choose to exploit their staff and keep the tips for themselves, sometimes in part, sometimes in full.
I congratulate the hon. Gentleman on bringing forward this Bill. It is certainly one I support, and hopefully a final victory for the long-running fair tips campaign run by Unite the Union. As he says, however, we know that some employers can be extraordinarily devious in exploiting loopholes in employment law at the expense of either the public purse or workers. What consideration is he giving to future-proofing this Bill to make it really difficult for operators, including those using digital platforms such as Deliveroo, for example, to avoid the spirit of such important legislation?
I thank the hon. Member—I would like to say friend—for her question. I will come to that later, but it sits within the code of practice and ensuring that at the heart of this Bill is a word she will hear me repeat many times: fairness. That is baked into the approach that will be taken. As I will say later, I am looking forward to meeting businesses, sector representatives and unions to chat about how we make that code of practice work well and ensure it is fair for everyone involved.
As hon. Members will know, over the past few months media reports have highlighted that the taking of tips, especially via credit cards, and businesses taking more than their fair share—indeed, taking a share of something they should not even be getting—is increasing. One of the reasons that concerns me, and why this Bill is so important not just in principle but right now and should be enacted as soon as possible, is that we are seeing a rise in the cost of living.
People who work in hospitality should not need to rely on tips as part of their salary. I am absolutely clear in the Bill that it is not about topping up salaries; it is about a gratuity, tip or service charge in addition. However, employees should be able to keep them. That should be at the heart of what we do, and that is what this Bill will do. That is why I say that fairness is key, because we all have a sense of fairness. We know what is right and wrong, and we know that if we give somebody some money to say thank you, they should be able to keep that money or choose to share it with others. That is key. A great deal of work has been done over the past few weeks to try to get this proposed legislation right, and I hope that people will see that in the Bill and that the code of practice will cover that.
I am grateful to my hon. Friend for bringing this important and overdue Bill to the House. We are all thinking of the people in hospitality who will benefit from it. I have been contacted by constituents who have had up to 15% of tips removed from their pay packet. Obviously, this Bill will address that. However, this measure will also matter to members of the public too. How many of us ask when we go to pay our bill, “Will the tips go directly to the person who has given us such great service tonight?” yet do not know whether the answer we get will be correct? This Bill will ensure that we have that security and that people paying their bill can trust that that tip will go to the person who has given them that service. I hope that my hon. Friend will have every success with this Bill, and that it will be backed up with a media campaign to let people know that their tips will go to the person who actually deserves them.
My hon. Friend makes a brilliant point. I thank her so much for her endorsement and support, and for representing her constituents. I have heard the same stories from so many Members. In fact, a lot of Members—I will not name them—tell me that they worked in hospitality when they were students, and have experienced this issue; it really cuts through. On my hon. Friend’s point about a media campaign, I invite colleagues from across the House to help me promote this legislation as widely as possible. I hope that in a year’s time—hopefully sooner, but it might be a bit later—we get to the day when a customer never again has to ask, “Will you definitely be able to keep this tip?” That is one of the ambitions of the Bill.
The Bill is not about bashing business. Most businesses comprise good people, good entrepreneurs and good CEOs, and most pass on tips fairly. The businesses that I have spoken to—especially in my constituency and through fantastic Members of Parliament across the House—support the legislation, and hospitality businesses definitely do so.
Let me turn to fairness for workers, which is covered in several aspects of the Bill.
I congratulate the hon. Member on bringing this excellent Bill to the House. Fairness is the key word. He has mentioned that he is working with businesses and trade unions. I am a Labour and Co-operative party MP. May I ask whether he has reached out to the Co-operative party? Many businesses are co-operatives, and I am sure the Co-operative party would be grateful if he reached out to it.
The hon. Member makes a brilliant point. The idea of the code of practice is to ensure that we do that engagement, and I am hopeful that when we reach out to such organisations, they will help with the media campaign. We need to ensure that everybody knows about the legislation and to highlight that there are businesses that do not pass on tips. In the meantime, I hope that people challenge businesses on that when they speak to them.
The Bill will provide greater transparency for employers and workers in teams regarding how tips should be treated; that will be clear to everyone. It will create a level playing field for the majority of businesses that already pass on tips to workers fairly and transparently, ensuring that they know that other businesses will do the same as they have always done. As we have already mentioned, through the Bill consumers will have the confidence that the full value of their tips will go to workers, and the premise of the Bill is that 100% of tips will go to the workers. The code of practice will agree how that will be shared, and we can turn to that point later.
Jill Mortimer (Hartlepool) (Con)
May I speak on behalf of all the backroom staff in hospitality venues? As a teenager, my son worked for many years as a pot washer for very little money, but he always felt really appreciated when he got the little top-up that was his share of the tips. We should remember all those people and how important it is to them to know that they are valued.
Absolutely. I thank my hon. Friend for her contribution. May I also mention the fabulous staff in this place? I know that on occasion, some very kind Members of Parliament do give tips, even though it might not be reported.
I have covered some points around fairness for workers, but I will go into a little more detail. The Bill will create a legal obligation for employers that receive tips directly from customers, or that have control or significant influence over the distribution of tips that workers receive directly, to distribute tips to workers fairly and transparently. The obligation will be attached to the total amount of the qualifying tips paid at, or otherwise attributable to, an employer’s place of business, and the tips must be allocated fairly between workers at that place of business. For example, in the case of a big chain, the tip will go into a pot to be distributed to everyone who works not in the chain, but at that particular venue.
Importantly, the situation will remain the same in cases where employers do not receive, or have control or significant influence over, tips. For example, the Bill will not cover me giving a tenner directly to a waiter or waitress at the end of a meal, as it is clear that it is for them. However, the Bill would come into force if they put the money through the business, perhaps via a credit card payment. Similarly, the Bill will not cover situations where employees already have their own tip jar that they look after, because those tips will not be touched by the business.
Fairness is key to ensuring that businesses and employees know exactly where they stand, but we also need to ensure that there is some flexibility. Every business is different—that is the nature of it. Someone working in hairdressing is going to have a different approach to the way they receive or manage tips from someone who works in a restaurant, bar or hotel. What we are trying to do with the code of conduct is to make sure that that is covered, and I hope that is going to come after this Bill today—
I am sorry to interrupt my hon. Friend in mid flow. As someone who has had many an argument with restaurant managers about removing service charges in London, in order to be able to give cash directly to staff, and nearly been thrown out of restaurants for it, may I put on record my congratulations to him on bringing this Bill to the House today? Let me also add my thanks on behalf of all the hospitality industry workers in my constituency and across the wider Cumbrian area who will benefit from this.
I thank my hon. Friend for that. He stands up so strongly for workers and for the rights of people across this whole country, but particularly in his constituency. I am very conscious that there is a thing called the tronc system, although I will not go into too much detail on it now because of the time available. Tronc is an arrangement commonly used in the hospitality sector, where an employer delegates the collection, allocation and distribution of tips to a person or persons known as a “troncmaster” or tronc operator. The Bill does not seek to regulate the operators of independent tronc systems, which are commonly used by many businesses already. However, I raised this matter when I was talking through how to make this Bill the best it can be and I found that some stakeholders have been concerned about whether a business could then put pressure on a troncmaster to do something that is unfair. So, to mitigate that risk, under this Bill workers can bring an employment tribunal claim if an employer’s use of an independent tronc is not fair. I hope that that will capture any concerns on that front.
As we have just discussed briefly, another aspect of fairness is ensuring that there are no deductions from tips. So at the core of the Bill is the creation of a legal obligation for employers to distribute all tips, gratuities and service charges to workers, without any deductions. When customers pay service charges, they expect that money to go in full to the staff and to the individuals they have asked it to go to. Sadly, some employers retain part or the whole service charge without passing it on to their workers, so this Bill will deal with that. Some hon. Members have asked me whether this legislation will also cover credit card deductions and administrative costs, and some businesses have raised that issue with me too. Since 2018, payment processing fees cannot be passed on to consumers. In line with that, employers will not be able to deduct payment processing fees from tips––that also includes mandatory and discretionary service charges which are added automatically on to customers’ bills by some hospitality venues. My hon. Friend the Member for Workington (Mark Jenkinson) will be relieved that that will no longer be the case, as he has probably had arguments on that front in the past. Administering tips should not impose significantly on a business’s operating costs, but that credit card admin charge might be significant for an individual. Two or three payments can be significant for an individual when we are talking about tips. So, again, this is about fairness; businesses do not incur a significant cost in respect of this money from tips, but if it were taken off the staff, it would be significant for them. It is important to include that provision in the Bill and to put what I have just set out on the record.
I apologise if I sound repetitive, but I said I supported the previous Bill today because it was the right thing to do, and I support this Bill because it is the right thing to do. I think my constituents, who probably spend quite a lot of their take-home pay in restaurants and bars, would be very shocked if they learned that their tips, whether or not made by credit card, are actually the legal property of the restaurant owner. That would really surprise people.
The timing of the Bill is important because hospitality clearly faces major challenges, particularly in recruiting staff. The more we can professionalise the hospitality sector and its employment practices, the better: it will make it more likely that restaurants and bars can be fully staffed. That is very important to me, because I represent a central London constituency. My constituency of Kensington and that of my neighbours in Westminster probably has the greatest density of restaurants, bars and other leisure facilities so the Bill is very important to residents.
I was shocked to hear that my local gastropub is no longer able to open on a Monday or Tuesday, not because it does not have the clientele—it is always overbooked, with people waiting for tables—but simply because it cannot get the staff. We cannot have a situation in which businesses, which are so important for livelihoods and for the general economy, cannot operate because they cannot hire staff. The Bill will go a small way towards making the hospitality sector more attractive to staff because they will have a legal entitlement to tips and will not simply have to wait for their employer to do the right thing.
Staffing in this sector is going to be so important going forward. We need to ensure that we have workers who can keep the economy going. In London the tourist season is beginning to start again. I am delighted to see in my constituency that not only domestic tourists but lots of international tourists are returning. So it is important that restaurants, bars and other leisure units can continue to function.
On a point of order, Mr Deputy Speaker. The Met Office has issued its first ever red warning for the heatwave that the country is likely to experience on Monday and Tuesday next week. Has the Department of Health and Social Care given you any notice of its intention to make a statement to this House about the health consequences for the public, not least given that this red warning means there is likely to be a risk to life?
Of course, our newspapers, television screens and airwaves are full of reports of overwhelmed ambulance services and accident and emergency departments. Given that the Secretary of State for Health and Social Care failed to answer my urgent question on Wednesday, I would have thought that invisible man might make an appearance today to advise and reassure the public that our public services and emergency services will be able to cope in the light of this emergency.
I thank the hon. Gentleman for his point of order, and for giving me forward notice. I have been given no notification that there will be a statement from the Department of Health and Social Care, or any other Department, today. Should that change, the House will be informed in the usual manner via the annunciators.
It is timely that the hon. Gentleman makes this point of order, as people should take advice in these unusual circumstances. People should take water with them when they travel, they should make sure there is plenty of ventilation and they should seek attention if they are feeling unwell. I thank him again for his point of order.
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Ensuring that tips are passed on to workers in full, with no deductions by employers, will make a real difference to workers’ lives, while not creating a burden on businesses. As I noted earlier, an important practical aspect of the Bill will be the code of practice, which I will expand upon now for a few moments. The Bill includes provisions for the Secretary of State to issue a statutory code of practice, which will promote fairness and transparency in relation to the distribution of qualifying tips, and help tribunals determine whether it is fair for an employer to make certain tronc arrangements. Employment tribunals must have regard to relevant provisions of the code when determining whether an allocation of tips or making of certain tronc arrangements is fair. The code will consider some of the factors that may be relevant to fairness and will provide a number of examples and real-life scenarios that exemplify fair tipping practices, to help reflect the myriad circumstances in which employers can handle tips in an acceptable fashion. The hon. Member for Neath (Christina Rees) mentioned engagement, so let me say that the code will be published in draft and consulted on before the relevant sections of this legislation come into force. The code will also require approval from both Houses of Parliament. I hope that that reassures colleagues across the House that there will be scrutiny and that we will ensure that it is covered fully. The defining principles of the Bill will need to capture the nuances of fairness. As I have mentioned, I want to engage widely to ensure that the code of practice really works. I welcome anyone reaching out to me after Second Reading. If the Government and the Minister support the Bill going through to the next stage, and the House joins us in that approach, I will be really keen to engage and hear hon. Members’ points.
One of the core issues is remedies and enforcement. Crucially, the Bill will be enforced by workers through the employment tribunal system and will provide employment tribunals with remedies where an employer has made deductions from tips or has not allocated tips in a fair and transparent way. If an employer does not allocate tips fairly among workers, the employment tribunal can make an order that does one of three things: require the employer to revise any allocation of tips that they have made, recommend that the employer deals with tips in a certain way, or require the employer to make a payment to one or more workers so that they receive the tips that they should have received.
The employment tribunal may additionally compensate workers by up to £5,000 for related financial loss attributable to a breach of the provisions. Workers will also be able to make a complaint to an employment tribunal if their employer does not keep sufficient records relating to tipping practices; the tribunal can order the employer to compensate workers by up to £5,000. It is worth noting that workers must consult ACAS before bringing forward a claim. The majority of employment disputes are settled before they reach an employment tribunal.
I would like it to be absolutely clear that nothing in the Bill will make changes to taxation for employers or employees. It is purely about employees’ rights and workers’ rights.
I will conclude my remarks because I want to hear the fantastic speeches that are no doubt coming up. I thank the Minister and her predecessor, my hon. Friend the Member for Sutton and Cheam (Paul Scully), for their incredible support with the Bill; I hope that I can convince colleagues to get it over the line today. I thank everyone who has helped me to introduce it to the House: hon. Members past and present, constituents and my fabulous Watford businesses and residents, who have repeatedly raised the importance of the issue. As we are all aware, the private Members’ Bill process is fragile, so I am keen to work with all hon. Members, all organisations and everyone I can to make sure that the Bill works. I urge the Minister to support it.
Doing the right thing is critical, and professionalising the industry is also very important. This is good timing, because as we are all aware, workers are suffering from the effects of global inflation—it is global; it is not a UK issue. So it is very important that employees are getting the proper pay package. I was shocked to hear that in the past some employers even used tips to make up the minimum wage. Clearly, that is no longer happening. It has been ruled out, but it is important that the intention of consumers is fulfilled. The intention of consumers is important. When I eat out, I give an extra 12.5%, not because I think that my burger should have cost 12.5% more but because I think that the waiter and the other staff deserve that extra remuneration.
The statutory code of conduct will be critical; we should not diminish its significance. How tips are allocated among staff will be important. Lots of staff work in these establishments, not simply the waiter who comes to the table. So getting the fair balance between the frontline and backline staff is going to be important. We should not diminish the significance of that. I am well aware that the Bill is just one step, and getting the details right is going to be critical.
My hon. Friend the Member for Watford (Dean Russell) spoke about the consultation that he has already done, but I encourage him to ensure that the detailed consultation carries forward. I am well aware that lots of restaurants are hierarchical institutions and perhaps the person who cleans the dishes in the back of the kitchen is not recognised to the same extent. However, clearly that person is integral to the restaurant. We, as consumers, may not see them, but they are critical and it is important that they are recognised.
I very much welcome the Bill, and it is shocking that the provision is not already the law. I appreciate the efforts of my hon. Friend the Member for Watford (Dean Russell), who introduced this Bill in 2021 but dropped it in anticipation of the employment Bill. Although I am sure the employment Bill will happen at some point, it was not in the Queen’s Speech, so it is good that my hon. Friend has introduced this private Member’s Bill.
This Bill is a great first step in getting things right for employees, but it is also an important step in ensuring employers are on a level footing and trading on an equal basis. Restaurants that do the wrong thing by their staff should not be in a better competitive situation because they are able to offer cheaper prices to consumers. This Bill is good not only for employees but for employers, because it puts everyone on the same footing and ensures that employers do right not only by their employees but by their consumers, who give tips in the full expectation that they are paid to employees.
I am fully supportive of this Bill. There is no question but that it is the right thing to do. It is important for my constituency, where so much of the economy is made up of restaurants and bars in the night-time economy. I am very grateful for the Bill on behalf of my constituents.
The Bill is also important because it further professionalises the sector, and we will find that many employment practices have to be professionalised in the post-coronavirus world, because only then will employers be able to recruit staff. In every regard, this is an important Bill that formalises what we all think is right, that employees should be able to retain their tips. The Bill fulfils the expectation of every consumer when they go out to eat and drink, and long may that continue.