Employment (Allocation of Tips)

– in the House of Commons at 2:33 pm on 14 May 2024.

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2.41 pm

Photo of Kevin Hollinrake Kevin Hollinrake Minister of State (Department for Business and Trade)

I beg to move,

That the draft Code of Practice on Fair and Transparent Distribution of Tips, which was laid before this House on 22 April, be approved.

The code of practice, which I will refer to as the code, will give legal effect to standards in the allocation and distribution of tips, gratuities and service charges, and transparency surrounding the keeping of records and the retention of written tipping policies. For brevity, I will refer to tips, gratuities and service charges as tips for the rest of today’s debate. Passage of this code will signal a landmark moment in our protection of workers’ rights. For the first time, the Government are ensuring cast-iron clarity about where tips are going once they have been paid, and setting a new standard for how tips should be treated.

Photo of James Gray James Gray Chair, Environmental Audit Sub-Committee on Polar Research, Chair, Environmental Audit Sub-Committee on Polar Research

The Minister said that, for brevity, he would consider tips, gratuities and service charges all to be tips, but surely service charges, which are a set charge against some practice or service, are quite different from tips, which are for fun or voluntary. Gratuities come somewhere between the two, do they not? Could he kindly enlarge on the definition of those three things?

Photo of Kevin Hollinrake Kevin Hollinrake Minister of State (Department for Business and Trade)

It is our position that they amount to the same thing. We know from customer behaviour that when a customer sees a service charge on their bill, they will usually not tip at that point because they believe that the service charge is a tip. We feel that that is in the same category, which is why we have categorised them together in this instance.

The Employment (Allocation of Tips) Act 2023 was a relatively simple piece of legislation, but one with an important purpose. Following the justified public examination a few years ago of the spectacle of some businesses retaining significant percentages of tips or even keeping them altogether, the Government committed to backing a private Member’s Bill on tipping. The law mandates that all qualifying tips must be passed on to the workers who earn them, rather than being retained by businesses, and it sets out that these tips must be allocated and distributed in a fair and transparent manner.

I reiterate my appreciation, which I set out at this Dispatch Box earlier this year, for the cross-party support that the primary legislation engendered, and for the positive and constructive tone in which all the parliamentary stages were conducted. I want to extend further thanks in particular to the original Bill’s sponsors, my hon. Friends the Members for Watford (Dean Russell) and for Ynys Môn (Virginia Crosbie), and subsequently Lord Robathan in the House of Lords. Today we are another step closer to bringing these important measures into effect.

It was remarked at the time that the detail was crucial, and we elaborated on that detail in December with the publication of the draft statutory code of practice on fair and transparent distribution of tips. I am grateful for the large volume and quality of the responses we received during the public consultation that followed. Everyone who provided feedback, whether via an online survey, through an email response or in a meeting with officials at my Department, should know that their views have been considered carefully. Responses have been used to amend and enhance the code, and will continue to inform the communications and support for businesses implementing these measures.

We were pleased to lay the updated code of practice before Parliament on Monday 22 April. The code was also published on gov.uk alongside a full Government response to the consultation, which provides more detail on the feedback received from businesses, workers and other stakeholders. I trust that right hon. and hon. Members have had, or will have, the opportunity to study the detail of the code in their own time, but I will briefly set out its provisions here today.

The code of practice contains summaries of the key intentions of the Act. The code sets out the scope of this legislation, emphasising that it covers all qualifying tips—that is, employer-received tips and worker-received tips over which an employer exerts control or significant influence. These measures apply to every sector and across England, Scotland and Wales. The code goes on to provide more detail on the need to maintain fairness in the allocation and distribution of tips. Rather than being prescriptive and potentially burdensome to employers, the code articulates key principles for employers to consider, protecting both the rights of workers and flexibility for a variety of approaches from businesses.

The code helps employers to engage in constructive and positive consultation with their workers, and helps to minimise the risk of discrimination, which may be indirect or unintentional, if due care is not taken. The code sets out that employers need to uphold transparency in the handling of tips. This includes keeping a written tipping policy that is clearly communicated to all affected workers. This requirement also includes retaining accurate tipping records to which workers have the right to request access. One thing to note is that this need to maintain a written tipping policy and make it available to workers does not apply to businesses that receive tips only on an occasional and exceptional basis.

Finally, the code expands on how to resolve conflicts that arise between employers and workers. While early and internal resolution of issues is preferable for all involved, workers may consult ACAS for impartial advice and assistance in resolving problems. The code informs workers about how an unresolved dispute may be escalated to an employment tribunal.

Photo of James Gray James Gray Chair, Environmental Audit Sub-Committee on Polar Research, Chair, Environmental Audit Sub-Committee on Polar Research

I am listening to the Minister carefully. I am sorry that I am not as familiar with the original Act I should be, and I apologise if I ask a foolish question as a result. He mentioned a moment ago that the code of practice would not apply to industries in which tipping occurs only rarely. Will he expand on what those are? For example, if I tip a taxi driver, would it apply to that? Obviously not. If I tip a waiter in a restaurant because he has been particularly helpful to me, why should that be shared with other people in the restaurant? To what sort of industries would the code not apply?

Photo of Kevin Hollinrake Kevin Hollinrake Minister of State (Department for Business and Trade)

As I said earlier, that provision does not apply to an industry or organisation that receives tips on an occasional or exceptional basis. An example would be a Christmas box or a Christmas present for somebody, or an industry that is not used to getting those kinds of gifts. My hon. Friend talked about the taxi industry, which is an industry in which people regularly receive tips. He also talked about a situation where a customer gives a tip directly to a worker. That tip can be kept by the worker if it is given directly to that worker and is not in the control of the employer. That is the difference: a tip given directly to somebody in a restaurant or some other place can be kept by that individual. We would expect that to be set out in a policy at employer level.

I want to take this opportunity to place on the record the Government’s gratitude to ACAS and all those involved in the tribunal system for their continued diligence on tipping and many other matters of employment law. Overall, the Government are proud today to endorse the approval of this code of practice. Following approval by this House and by the House of Lords, the code and the other measures in the Act will come into force on Tuesday 1 October.

With this code of practice, the Government are righting a wrong, delivering a level playing field for businesses and continuing our proud record of standing up for and defending the rights of workers. I commend the statutory code of practice on fair and transparent distribution of tips to the House.

Photo of Justin Madders Justin Madders Shadow Minister (Future of Work), Shadow Minister (Employment Rights and Protections) 2:50, 14 May 2024

I thank the Minister for his introduction. Once again, I refer to my entry in the Register of Members’ Financial Interests. I also join the Minister in paying tribute to the hon. Members for Watford (Dean Russell) and for Ynys Môn (Virginia Crosbie) for their work on the private Member’s Bill that led to where we are today.

As the Minister outlined, we are finally here to debate the code of practice on fair and transparent distribution of tips, which is necessary to deliver the provisions of the Employment (Allocation of Tips) Act 2023. I say “finally” not just because it has taken a year since Royal Assent for a code to be agreed, but because it has been seven years since action was first promised on tips.

As far back as 2017, the Conservatives promised to ensure fair tips for hospitality workers. In that time, it is estimated that workers will have missed out on some £200 million a year in lost tips. That is over £1 billion taken from workers in some of the economy’s lowest paid jobs. It is a little disappointing to see that the Government have delayed the Act’s implementation from July until October 2024. By our calculations, this further delay will cost people in the hospitality sector another £50 million.

With that out of the way, I make it clear that we will not oppose the code. Action on tips is already long overdue, and we do not want to see it delayed any longer. We believe that these measures will have a positive impact on the lives of workers in the hospitality sector and other industries that frequently receive tips, but we also consider that there is room for improvement. I will refer to those specific issues in due course.

However, I start by referring to the Government’s consultation, which starkly set out why action is needed. The proportion of respondents who reported that they did not receive the tips to which they were entitled was very significant. Only half of those who completed the consultation reported that staff receive all the tips. Of course, this means that half the respondents to the consultation do not. Extrapolated across those working in the sector, around 1 million workers will benefit from this legislation. Of those reporting that staff do not receive all the tips, 21% reported that there was an administrative fee, another 13% said there were other deductions, and a staggering 11% reported that no tips were passed on at all. It is jarring that, in the face of such clear mistreatment of workers, there has been such a delay to get to this point. That the Government chose to delay the implementation of the Act after discovering the staggering statistics in the consultation rubs a little salt into the wound.

Some 73% of workers who responded to the consultation reported that their employer had not sought agreement on the allocation of tips, and 40% of employers consulted did not pass on tips to agency workers, in part or in total, which clearly needs to be addressed, and it will be by this legislation. These statistics may be a reason why we face another delay, because clearly a lot of businesses need to get up to speed in order to be compliant, which begs the question of why more has not been done before now.

Will the Minister outline the Government’s approach to working with businesses to ensure that they are aware of their obligations under the new laws? What steps will the Department take to ensure support in the areas where businesses raised concerns in the consultation, such as transparency and record keeping on tip allocation and distribution? I am particularly interested in how the Department plans to engage with small and medium-sized enterprises to ensure that they remain compliant with the law once it comes into effect. Workers will benefit only if employers are aware of and compliant with the law, so it would be welcome to hear the Government’s plans.

I draw the House’s attention to a couple of specific elements of the code. Paragraph 25, on employers consulting their workforce on the policy, seems pretty minimal in setting out what a good consultation looks like. If an individual makes an employment tribunal claim, does the Minister envisage there being any opportunity for there to be an examination of the quality of the consultation?

The very important point at paragraph 26 needs further clarification. It says that employers should review their allocation policy “on a regular basis”, but there is no indication of the timescale within which this should take place. Does the Minister have a view on what the timescale might be? We are dealing with a workforce who might change quite regularly.

That leads me to the question of enforcement. I repeat the old adage that people’s rights are only as strong as their ability to enforce them. The sector to which the Act predominantly applies is made up of workers in insecure, low-paid jobs that are generally in non-unionised workplaces. Staff turnover is high, meaning that many workers do not stay with the same employer, or even within the same industry, for long periods of time.

These factors will doubtless have an impact on workers’ ability to assert the rights afforded under the Act. Many may be entirely unaware of the stipulations of the Act. Even if they are aware of the stipulations, they might not always be aware of the ways in which they can enforce them. Particularly if the Government persist with their plan to reintroduce employment tribunal fees, it may well not be financially viable for people to assert their rights, as the fee for lodging a claim might well be more than a worker is seeking to claim back.

More fundamentally, a worker on a zero-hours contract or in another form of insecure work may fear that asserting their rights will be detrimental to their future chances of receiving work. For example, if a worker on a zero-hours contract is concerned that they have been underpaid the tips to which they are entitled and requests to view their tipping record, as is their right under the Act, their employer might consider this behaviour to be stirring the pot and choose to reduce the hours they give that worker, or possibly even to stop giving them work at all. A worker with less than two years’ service can be dismissed without cause and have no claim for unfair dismissal.

The legislation does not cater for people to claim that they have been unfairly dismissed for asserting their statutory rights under the Act. If that is the case, it is a huge oversight given that there is protection against unfair dismissal for asserting most other statutory rights. Will the Minister consider looking at this point again, as there is a real concern that, unless people have legal protection and confidence that the law is on their side, they may be reluctant to avail themselves of their rights.

In terms of the impact on the tribunal system, have the Government made an assessment of the propensity of those in the hospitality sector to take forward claims? Has modelling been done to judge the expected number of workers who will take forward tribunal claims?

It seems to me that the lack of proper protections will mean that the minority of bad employers will be able to continue operating with impunity, withholding the tips that their workers have rightfully earned. As a minimum, I would expect there to be some monitoring of the legislation’s effectiveness, perhaps through surveys or consultations. After all, paragraph 35 of the code states:

“An employer cannot be said to have met its obligation to handle tips fairly and transparently if individual workers are not aware of their entitlements in line with the tipping policy.”

If we are to have confidence that those words mean something, surely we need monitoring to ensure that the code is effective.

There are a couple of other issues that I would like to raise. First, on when a worker is entitled to receive their tips for a given month, the code makes reference to the provision that a tip must be paid by the end of the next month. There is a question about why tips are not passed over on the same schedule as most workers are paid.

Secondly, according to paragraph 13, tipping by app is judged to be out of scope of the legislation. Can the Minister confirm exactly what “tipping by app” means? I take it to be a form of digital tipping, akin to leaving cash, but we need some clarity. Will he outline what work the Department has done to identify the types of tipping practices that will be in scope? There is a concern that, although tipping by app might not be widespread now, it could be seen as a way to avoid obligations under the Act in certain circumstances, to prevent staff from getting the tips that were intended for them.

In summary, we welcome the fact that the Government have finally got to the stage of being able to implement this policy. Sadly, we will have to wait another five months for it to be implemented, but the changes set out today will have a positive impact on workers, who for too long have been losing money that was always intended for them. We will monitor the progress of this legislation closely and, if necessary, take further steps to ensure the good intentions behind this Act are delivered in full.

Photo of Dean Russell Dean Russell Chair, Speaker's Advisory Committee on Works of Art 3:00, 14 May 2024

It is a proud moment for me to stand here today, because I brought in the private Member’s Bill behind this change and was able to get it over the line with the able effort and support of my hon. Friend Virginia Crosbie. It is a joyous day, because I am absolutely passionate about two things, fairness and Watford, and we have some fantastic hospitality locations in Watford. Our cafés and restaurants include Jamaica Blue, the Flourish bakery, the Beech House, the Tudor Arms, the Sun Postal sports club, the Badger pub, Rhubarb Café, Random Café, Cassio Lounge and so many more. I would love everyone here to visit as often as possible, because they would see delights that they would get nowhere else in the world.

I list all those locations because in each hospitality organisation, in each café and restaurant, there are not only people who run the business, but many staff who work in it. I was talking about the tips Bill way back when I originally tried to introduce it via a presentation Bill, which did not quite make it through. As I have a routine of never giving up, I managed to obtain a private Member’s Bill—that was through luck—and then got it through, very much with thanks to the Government. I especially thank the Minister who is on the Front Bench today, who is doing incredible work, and his team.

This measure was so important to me because I would go to meet these organisations and chat to staff, especially during the pandemic, and they were all consistent in their concerns about whether they would get to keep tips. A big shift took place at that time from people giving cash to somebody individually towards a world where cash is not so common. That is not necessarily a good place to be, but it is the way the world has moved. Far more people will now pay a tip on a credit card at the end of a meal or when they leave a café. Every one of us will have asked the same question when we have made that payment and given our tip, which is, “Will you get this?” My Bill will help to resolve that.

Photo of James Gray James Gray Chair, Environmental Audit Sub-Committee on Polar Research, Chair, Environmental Audit Sub-Committee on Polar Research

I congratulate my hon. Friend on his superb effort in getting his Bill through, as it is a wonderful thing to have done. I support the principles behind it, but I am slightly puzzled by one aspect: should the restauranteur or bar owner not be charging the correct price for the service, without any tip or service charge having to be added on? Should he not be paying his workers a fair wage for the job they are doing, without any tips, service charge or other things added? Surely my hon. Friend’s Bill will set this in stone. I say that even though I do not like tips very much, as I would much rather pay a fair price to the restauranteur and to the person who works for them.

Photo of Dean Russell Dean Russell Chair, Speaker's Advisory Committee on Works of Art

My hon. Friend makes an incredibly important point, which gets to the heart of this: the fairness here is to not just the workers, but the businesses. Most businesses do the right thing and pay a decent salary. The Minister can correct me on this, but I believe that legislation taken through a while ago means that tips cannot form part of a salary. So businesses should be paying a decent wage. When some organisations do the wrong thing, what they are doing is anti-competitive; they are making profit off the backs of their workers by keeping their tips, and the businesses doing the right thing in giving 100% of the tips to the staff are less competitive. My approach is therefore far fairer to the majority of businesses that do the right thing, and to the workers. It is also far fairer to the customers, who thought that the money was going to the staff and did not realise that a percentage of it, or in some instances all of it, was being taken from them.

My Bill will ensure fairness—that is the key word we should all take from the Bill and from today’s debate. It will ensure that all tips, 100% of them, are paid to staff. Agency staff will be included in that; when I originally talked about this Bill, some had a concern about a two-tier system for workers. The Bill will also ensure that a policy is in place—a code of practice—so that businesses ensure that their staff know where they stand. Businesses will be able to be clear with everyone who works for them how the tipping practice will work; I will not go through the full list, as the Minister did an excellent job of listing it earlier.

This measure has been a journey. I mentioned my work on the Bill with my hon. Friend the Member for Ynys Môn, but, as with all journeys, I began this trek much earlier. In many ways, this began with the fantastic work done by my right hon. Friend Sir Sajid Javid when he was a Secretary of State. He put in place the work enabling the Government to look at how we could make sure tipping was fair, so this measure is built on the shoulders of giants. I will not list them now, but many Members have been involved in making sure my Bill came to fruition. Many organisations were also involved, and I thank UKHospitality, especially Kate Nicholls, who has done a fantastic job; and the Night Time Industries Association, which has done brilliant work. Conservative Members do not often talk positively about unions, but the GMB has done fantastic work, and I should give another mention to ACAS. Lots of businesses, employers and employees have also really pushed for this to come to fruition.

I want to thank some current and former members of the Government, particularly my hon. Friend Paul Scully, who was incredibly supportive when I originally tried to bring my legislation in as a presentation Bill. At the time, we were going to make it part of the Employment Bill. Unfortunately, that did not happen, but many of the policies that were going to be included did happen through various other routes. I thank my hon. Friend Jane Hunt, who was a fantastic supporter and an able Minister.

Of course, I also thank the Minister before us today and his team. He has been excellent in making sure that this is pushed forward and, through him, I would like to thank his team. Some of them were my team in my short time as a Minister, so I know the passion they had about making sure that we got this right. During my brief time as a Minister, I had to hand over this precious baby of mine, the tips Bill, to a colleague to make sure we could keep it moving forward through the House. That was when I was able to speak to my hon. Friend the Member for Ynys Môn, who has an incredibly important hospitality industry in her constituency. I could not think of someone more able and more energetic to make sure that we got the Bill through. Through her work and our work with Lord Robathan, we made sure that it got through and received Royal Assent. Many Members will not know that on the day it was given, I was fortunate enough to meet the King that morning in Parliament—I am sure that is a rare story and one for a pub quiz sometime in the future.

The other person I would like to give a huge thanks to is the lady who rarely gets a mention in here but who is behind so many of these incredibly important Bills: my hon. Friend Rebecca Harris. She does an incredible job in giving us guidance on how to navigate the complex system of getting a Bill through Parliament and in giving us confidence that it is possible. She has made sure that many Bills have got through and gone on this incredibly important journey, including many others in which I have had involvement in different ways, such as those on flexible working, maternity care, leave and so on.

My Bill will help about 2 million hospitality workers across the UK. That is an incredible number. When I have spoken about this to people around the House or to my constituents, I have found that so many more people will talk about its importance: customers who want to make sure that money for which they have worked hard and which they are giving as a thank you gets to the people they are giving it to; and colleagues who have family members who work as waiters or waitresses, or who work in bars, as this will make sure that they get the money that has been gifted to them. Many colleagues have spoken to me about their experiences of working in hospitality while at university or when they were younger. That has shown me how the hospitality sector plays an important role in our society: it provides a type of apprenticeship to many of us before our careers. We learn a lot about our culture, society and community, as well as about people, through hospitality. That is why I have been so passionate about saving our night-time economy, including music venues, in Watford and across the UK. Music venues have been at the heart of our society and I fear they may be damaged in the future, but I hope the Bill may play a small part in helping them.

The Bill is also about fairness. It is impossible to legislate for fairness in society—it is a gut feel—but fairness is at the heart of what it is to be British. We believe in fairness in all parts of our society. At its heart, the legislation goes back to the fact that when someone gives money as a gift to someone else, they expect them to get it. That is what this Bill will ensure, and I am grateful to the Government for that.

I want to raise a couple of related points with the Minister to ensure they are covered as the legislation moves forward. We need to ensure there is a communications strategy before October so that workers know their rights, how to access them and what is covered. Businesses also need to know that the legislation will not be a burden. During the early stages of the Bill, I was mindful that it must not be a burden and more red tape for businesses. The majority of businesses get that and understand it. Those that were doing the wrong thing will, no doubt, kick up a fuss. Over the coming weeks and months, we will probably hear about businesses trying to get around the regulations by forming new practices. I hope the Government will clamp down on those, and name and shame the businesses involved; I will certainly be happy to do that to ensure that fairness is the heart of the regulations.

The Government have a role to play in supporting the hospitality sector as a whole as best they can. Businesses in the sector are important parts of our communities; they are in the heart of every village, town and city. Hospitality is often the reason people visit an area, it is often the first port of call for a job and a career, and it plays an important role in entertainment and culture. No other industry has such an important and broad role, so I want to ensure it is fair. I thank the Government, the Minister and colleagues across the House who have been incredibly supportive, especially my hon. Friend the Member for Ynys Môn. Finally, may I say a huge thank you to my constituents in Watford? If they had not put me here, the Bill may not have been making progress today.

Photo of David Linden David Linden Shadow SNP Spokesperson (Social Justice) 3:12, 14 May 2024

It is genuinely a pleasure to follow Dean Russell. I thank him and congratulate him on the private Member’s Bill that led to this code of practice coming to the Floor of the House. It is a small but significant step forward in improving workers’ rights. Regardless of our political differences—I suspect there are many—I have always found the hon. Gentleman to be kind, thoughtful and dedicated to public service, and I am very grateful for that. It is therefore no surprise that having won the equivalent of the parliamentary lottery, he chose to bring forward legislation that commands such cross-party support, and I thank him for that.

I will make reference to the briefing issued by Unite the union later in my remarks, but at the outset I declare my own membership of Unite, although I should be clear that I have no particular financial interests to declare.

One of the most frustrating aspects of the 2019 to 2024 Parliament has been the lack of significant progress on improving employment law more generally. Yes, there have been piecemeal bits of legislation, such as the Bills brought forward by the hon. Member for Watford, my hon. Friend Stuart C. McDonald and Wendy Chamberlain, but they have all come forward as limited Back-Bench Bills. It is undeniable that a vacuum was created for these private Members’ Bills to move forward due to the sheer absence of the substantial Government employment Bill that many of us expected. Indeed, we were promised such a Bill on no less than 20 occasions by Ministers. It is now seven years since the Taylor review and still no action has been forthcoming from the recommendations of that report.

Photo of Kevin Hollinrake Kevin Hollinrake Minister of State (Department for Business and Trade)

I am sure the hon. Gentleman would like to correct the record. A number of recommendations in the Taylor review have been implemented, not least the right to request predictable terms and conditions, which went further than the recommendations in the review. Will the hon. Gentleman acknowledge that fact?

Photo of David Linden David Linden Shadow SNP Spokesperson (Social Justice)

I am absolutely willing to acknowledge that some recommendations from the Taylor review have been progressed, but no significant action has been forthcoming. A lot of MPs have said that; indeed, even the hon. Member for Watford said it was regrettable that there was not an employment Bill. I am simply pointing out the fact that an employment Bill was promised in this Parliament. We found time to legislate on a whole manner of other issues, some of which have, frankly, been with a view to creating a wedge at the general election, whereas we know that the legislation framework we have around employment law is not necessarily fit for the 21st century and the kind of economy we now have.

The UK exited the European Union in January 2020 to the cheers and trumpets of Brexiteers who promised that Britannia unchained from Brussels would lead to an improvement in workers’ rights. In reality, and from what I can see in Glasgow, all that has happened is that employers in the hospitality and tourism sectors now just have fewer workers.

In citing the briefing from Unite, I want to thank it for the work it has done to engage with employees and to gauge their opinions about tipping policy. For context, those who have responded are already engaged trade unionists with a track record of activism and a decent understanding of policy. That is what makes the answers particularly striking. When asking whether an employee’s workplace passed on all tips to its staff the answers were: yes, 63%; don’t know, 21%; no, 11%; and some 5% indicated that tips were only accepted by card on an employer-operated tronc that employees paid tax on. Those statistics paint a picture of the sheer scale of the issues workers face, especially when it comes to tipping in hospitality.

On tipping policy, some other issues need to be ironed out and considered further, namely whether backroom staff, such as those who are integral to preparing and producing a meal, not just delivering it to the table, be tipped, and whether the tips are being distributed equitably. All workers need to be eligible to receive tips, whether they are on a zero-hours contract or are permanent. Progress has been made on extending tips to agency workers, but in reality we now operate in a gig economy. It is vital that the legislative framework that comes from this place reflects that.

From the Government’s response to the consultation, 40% of employers admit that they do not issue tips to agency workers despite that being an obligation under section 27H of the Employment Rights Act 1996. The hon. Member for Watford was spot on when he said that the comms to employers and employees must be very clear in the run-up to October this year. There must be something that can be done, for example, with employees who still receive a payslip. Could the Government bring forward measures to require all employers to put some sort of small note on payslips to make clear that the laws on tipping will change in a couple of months?

The legislation we are piloting through the House today makes the point that our legislative framework does not reflect the reality of the UK economy and labour force in 2024. More needs to be done to protect workers, especially those on zero-hours contracts. Arguably, that point should weigh heavily on the minds of shadow Ministers who, if polls are to be believed, might shortly be assuming red boxes and Whitehall offices in the coming months.

As we approach the cigarette end of this Parliament, attention turns to the incoming Government and their ambitions for workers’ rights. It would be fair to say that the small c conservative approach to workers’ rights from the official Opposition has not necessarily been wholly welcomed by those in the Labour movement. Only last week, Unite’s general secretary, Sharon Graham, was on record as saying:

“It looks like all the warnings Unite made earlier about the dangers of Labour rowing back on its pledges for the New Deal for Workers have been proved right. This new Labour document on the New Deal, issued to the unions on Monday, is a row back on a row back. It is totally unrecognisable from the original proposals produced with the unions. Unrecognisable. Workers will see through this and mark this retreat after retreat as a betrayal. This new document is turning what was a real new deal for workers into a charter for bad bosses. Labour don't want a law against fire and rehire and they are effectively ripping up the promise of legislation on a new deal for workers in its first 100 days.”

Photo of Rosie Winterton Rosie Winterton Deputy Speaker (First Deputy Chairman of Ways and Means)

Order. I assume the hon. Gentleman will be coming back to the motion before us.

Photo of David Linden David Linden Shadow SNP Spokesperson (Social Justice)

I am very happy to inform you, Madam Deputy Speaker, that I am talking on employment legislation, which I believe is germane to this debate.

Unite’s general secretary goes on to say:

“Instead, we have codes of conduct and pledges of consultation with big business. Likewise, the proposal to legislate against zero hours contracts is watered down to almost nothing…In truth this new document is not worthy of discussion. All unions must now demand that Labour changes course and puts the original New Deal for Workers back on the table.”

That was a warning shot to the Labour party that it, too, must be more ambitious and not leave the task of protecting workers’ rights to the valiant efforts of Back-Bench MPs who happen to be lucky in the private Members’ Bill draw.

I am sure that you will be glad to know, Madam Deputy Speaker, that I will draw my remarks to a close, and say, yes, the measures before us today have the potential to put up to £200 million a year back into the pockets of hospitality staff and could benefit more than 2 million workers across the hospitality, leisure and service sectors.

That is a legislative achievement to be rightly celebrated in this place but it comes against a backdrop of increasing legislation that restricts the rights of trade unions to exercise functions of collective bargaining. It is no surprise, therefore, that the UK now has some of the most restrictive trade union laws in western Europe—something that has worsened over the past decade. Workers deserve better, and today is another baby step to improving things, but it largely goes against the grain of Westminster policy formulation when it comes to workers’ rights. And it is frankly little wonder that the Labour movement in Scotland, so ably represented by the Scottish Trades Union Congress, has now concluded that legislative competence for employment law should be devolved to Scottish Ministers. Failure to do so—be that by Labour or the Tories—will lead Scots to conclude one thing and one thing only: that Westminster is not working for working people.

Photo of Virginia Crosbie Virginia Crosbie Conservative, Ynys Môn 3:21, 14 May 2024

I am delighted to be speaking on the day that this code of practice is approved by this House.

When I took over the sponsorship of the Employment (Allocation of Tips) Bill, a private Member’s Bill due to his promotion of my hon. Friend Dean Russell—a champion for Watford—I knew just how important it would be to the pockets of millions of people across the UK, particularly in my constituency.

The Bill is about fairness and transparency. It is about reducing discrimination and it is about creating a level playing field for businesses. Importantly, the code will enable disputes to be resolved quickly and fairly. Some 8% of people in the UK work in the tourism sector. That rises to 11% in Wales and a whopping 18% on Ynys Môn—that is right, almost one in five is employed in the tourism and hospitality sector in my constituency of Ynys Môn.

If, as is estimated, workers in the sector will receive an average £200 per year more in their pockets, then a rough calculation suggests that this measure alone could generate around £900,000 for workers across Ynys Môn annually. As someone who financed my A-level and university studies by waitressing, I know at first hand how important tips are.

Madam Deputy Speaker, this Bill is not a new nuclear power station or a freeport, but it is significant to local workers and families struggling with the cost of living. I have to say that those working in hospitality and tourism on Anglesey are a fantastic bunch and are dedicated to supporting our local communities in so many ways.

The team in the Oystercatcher in Rhosneigr are working with community champion Sue Gillett to help raise funds for Mirili Môn as part of Dementia Week this Thursday. At Catch 22 in Valley, Neil, Mel and the team support local farmers through their farmers markets. The Driftwood in Trearddur Bay hosts fabulous quizzes to raise funds for local community groups such as the Scouts, the SSAFA, and the Royal National Lifeboat Institution. And Dave and Amanda Jones from Anglesey Fishing Trips do so much to reach out to tourists and to our local community.

There are so many fantastic people and communities that will benefit from this measure, particularly those on Ynys Môn, and I am proud to see that, with the approval of this code of practice, this legislation is moving another step closer.

Photo of Kevin Hollinrake Kevin Hollinrake Minister of State (Department for Business and Trade) 3:23, 14 May 2024

I thank hon. Members for their contributions to this debate in which we are seeking to ensure that the draft code of practice on fair and transparent distribution of tips is approved.

I will turn now to the specific issues raised. The shadow Minister talked about engaging with the sector, which is very important. I can tell him that we engage regularly with organisations such as UK Hospitality, the British Beer and Pub Association and the British Institute of Innkeeping on these matters and have been doing so for many months, as we want to make sure that their views are heard. The non-statutory guidance that we will be bringing forward should provide more help for those organisations to comply with the important provisions of this legislation.

The shadow Minister asked whether we would review the policy on a regular basis. We will obviously keep all these matters under review, and the guidance should help to inform the sector about requirements in terms of both employees and businesses. It is hugely important that we do so. He asked whether a person could take a claim forward to an employment tribunal for unfair dismissal. Clearly, employment tribunals are there to ensure that workers can assert their rights if they feel that their rights have not been respected, so we would definitely expect an employment tribunal to hear such a case.

The shadow Minister asked about tipping by digital apps. We see this as a new phenomenon and an interesting development, enabling the customer to be able to tip an individual using an app, QR code or whatever, and we will not stand in the way of that. Where a tip has been given directly to a member of staff, it is clear that that tip should be kept by the member of staff. The app is there to allow flexibility in the implementation of the code or the guidance, rather than allowing businesses to avoid their clear obligations.

The shadow Minister asked about payments and why they are paid the following month. I think it is reasonable to allow a business to be able to calculate the amount of tips that are received in a month and then pay those out to workers in the month following. We think that that is a reasonable balance to strike. He asks why we are taking another five months to put this legislation in place. Clearly, we want to ensure two things—that we get this right and that we respect some of the pressures that exist in the hospitality sector, which has been through a difficult time, with increases in the national living wage, the cost of living crisis and the covid pandemic. We are trying to make sure that we take the sector with us, rather than impose unfair new burdens on it. We do not think that these measures are unfair, because we know that the majority of businesses would adopt these kind of rules even without this legislation.

David Linden seemed to imply that we on the Conservative Benches were going to use Brexit to improve workers’ rights. I am always keen to improve workers’ rights, and we have done so in this Parliament, but I remember his party clearly saying that Brexit would be a bonfire of workers’ rights and that certainly has not been the case.

Photo of David Linden David Linden Shadow SNP Spokesperson (Social Justice)

Does the Minister consider that workers’ rights have improved? If he does, why is it that trade union organisations across Europe recognise that the UK has some of the worst employment rights across Europe?

Photo of Kevin Hollinrake Kevin Hollinrake Minister of State (Department for Business and Trade)

Yes, those rights have got better. We have introduced legislation that covers the right to request flexible working, neonatal care leave, carers’ leave, protection to cover redundancy during pregnancy and return to work, the right to request predictable terms and conditions, the tipping Bill, and shared parental leave. All those things have been introduced, or supported, by this Government. We see those protections not as an opportunity to create a wedge issue, but as the right thing to do by our workers.

Photo of David Linden David Linden Shadow SNP Spokesperson (Social Justice)

Is the Minister seriously trying to tell the House that the former Secretary of State, Grant Shapps, did not relish the opportunity to bring forward the Strikes (Minimum Service Levels) Act 2023, seeing it as a wedge issue that would cause trouble with the Labour party? Come on!

Photo of Kevin Hollinrake Kevin Hollinrake Minister of State (Department for Business and Trade)

That is a refrain that we constantly hear from the SNP. To be fair to the hon. Gentleman, he did refer to ensuring that we worked alongside hospitality on the guidance, but apart from that, there was nothing in his remarks about the needs of business, and the legislation is about the needs of business. The strikes that affected this country, particularly at the end of last year and in the year before last, cost the hospitality sector around £3 billion. That is why we legislated as we did, and we feel it was the right thing to do.

The hon. Gentleman would do well to reflect further on the needs of business as well as the needs of workers. We believe that there is a balance to be struck, and he has got that balance wrong in Scotland. Hon. Members need not listen to me; just look at the numbers. The most recent figures for economic growth in Scotland over the 10 years from 2011 to 2021 show Scotland’s cumulative GDP growth at 7.2%, England’s at 14.9% and the whole of the UK’s at 12.9%. SNP MPs would do better to go back to their nation and constituency and drive economic progress forward.

My hon. Friend Dean Russell, who has done such good work in this area, talks about fairness. I know he stands up for fairness, and for Watford; I have seen the amazing montages of all the times that he has mentioned Watford in this Chamber. He deserves plaudits for his work. He says that he was lucky, but as the great Gary Player said, the harder you work, the luckier you get. The success that my hon. Friend has been an instigator of today is due to his hard work and determination. He talks about what we have done on communications, working with employer groups, employee groups and the hospitality sector. Yes, we do that—we work with trade unions, ACAS, UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping and others to ensure that the code of practice and the guidance that will follow will leave them fully cognisant of the requirements on the sector—a sector that is so important to our economy.

My hon. Friend James Gray said he does not like giving tips. He is free not to give a tip if he does not feel it is appropriate, but most people would say that for good service, they would be prepared to provide a tip. The key point of this legislation is that that tip should be retained by the individuals who provided the service.

Photo of James Gray James Gray Chair, Environmental Audit Sub-Committee on Polar Research, Chair, Environmental Audit Sub-Committee on Polar Research

May I correct the impression my hon. Friend has given of what I said? I did not say that I do not like giving tips. I like giving tips—I am quite a generous tipper, I think. However, I wish I did not have to. I wish people were paid enough to make tips unnecessary. That was the point I was making.

Photo of Kevin Hollinrake Kevin Hollinrake Minister of State (Department for Business and Trade)

My hon. Friend makes a very good point. Of course, we have increased the national minimum wage by record amounts this year to try to make sure that people get paid enough. It did surprise me to think that he would not be a generous tipper, because he has been generous in all my interactions with him.

Finally, my hon. Friend Virginia Crosbie talked about her constituents and the benefits that the code will bring—£900,000 in her constituency, I think she said. She does a great job for her constituents. I must say that my daughters are both pretty pleased with the code as well, as they both work in local establishments.

When the code and other provisions on tipping come into force in October, we will right a wrong and ensure that tip money goes where it should: to the workers who provided the service. We will continue to monitor the operation of the code and the major industries that it covers, and we will not hesitate to amend it—with parliamentary approval, of course—if necessary. I can also confirm that additional, non-statutory guidance will be published before the code comes into force, to provide further background and help employers to remain compliant with the requirement. I commend the motion to the House.

Question put and agreed to.


That the draft Code of Practice on Fair and Transparent Distribution of Tips, which was laid before this House on 22 April, be approved.