Code of Practice on Fair and Transparent Distribution of Tips - Motion to Approve

Part of the debate – in the House of Lords at 12:08 pm on 24 May 2024.

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Photo of Lord Leong Lord Leong Shadow Spokesperson (Business and Trade), Opposition Whip (Lords) 12:08, 24 May 2024

My Lords, I thank the Minister for introducing this code of practice, and the noble Lord, Lord Addington, for his contribution.

How often do we find ourselves in this situation? It is the end of a busy week and we are sitting among friends and colleagues in a beautiful venue, talking about the usual things—politics, the weather, or how unusually this week those two things have combined to make the news. As things inevitably draw to a close, our little group is presented with a Bill, which, after a bit of haggling and discussion, we agree on. So then we come to the matter of tips—or, more specifically, the draft Code of Practice on Fair and Transparent Distribution of Tips.

The hourly rates of pay in hospitality jobs are rarely fantastic, especially before Labour’s national minimum wage, but they are often boosted considerably by tips. Although we do not have such a strong tipping culture as, say, the United States or many countries on the continent, tipping is nevertheless a considerable element of the hospitality economy. The prospect of tips encourages staff to provide a better service, and tips enable diners and drinkers to show their appreciation for the people serving them. Tips are symbolic of a very human connection: even when a meal may cost more than the student waiter may earn in a single shift, we see and acknowledge those who provide the service that makes our time enjoyable. There has always been an implicit understanding that, when we add a tip to the bill, our money will go to those doing the front-line work and often the lowest-paid jobs, on hourly, variable part-time wages.

Although essentially transactional, tips oil the wheels of the industry. However, as we move more and more to a cashless society and tips become electronic digits on a card machine instead of notes in a jar on the bar, the transaction moves further away from the human and there is a risk that this direct connection is lost. Good employers in the sector value their staff and know that, if their customers have a positive experience, they are more likely to return. Treating staff well and honouring the connection between customer and server that a tip represents are important in retaining good staff, but some restaurant owners, and many high street restaurants and bars, have begun to see tips as part of their income stream and not a payment to their employees.

Even before Covid, hospitality was a tough business, operating on the finest of margins. The pandemic, more people working from home and the cost of living crisis have had an enormous impact on the sector, especially the night-time economy. The temptation for owners not to pass on tips is understandable, but the people who deliver the service also face the challenges of rising costs and fewer shifts. Many will always be dependent on tips as a crucial part of their income. It is wrong for this to be denied them.

Labour supported this Act as it passed through Parliament. As part of A New Deal for Working People, we have already pledged to end unfair tipping practices and guarantee that workers get their tips in full.

This code of practice provides overarching principles on what fairness is for the purposes of tipping, including employers having a written policy on tipping. The updated code will have statutory and legal effect, which means that it can be introduced as evidence in an employment tribunal. We are delighted to support this, in what may be my last speech in this Parliament.

I give my thanks and appreciation to all noble Lords who have ensured that this legislation, which will mean a great deal to very many of the lowest-paid, hard-working people in the country, will become law. I thank the Minister for the courtesy and good humour he has shown me in my brief period as Opposition spokesman, as well as the noble Earl, Lord Minto, and the noble Lord, Lord Offord, who have shown me the same courtesy. I look forward to returning and seeing many noble Lords in this Chamber again in a few weeks’ time, perhaps from a very different vantage point.