Trade union Unite is leading a campaign calling for the government to strengthen the Fair Tips Law, claiming employers are exploiting loopholes to keep money meant for staff.
The Employment (Allocation of Tips) Act, which came into force a year ago, mandated that all tips, gratuities and service charges must be passed on to workers without any deductions.
But while the government claimed the legislation would ensure workers would keep 100% of their gratuities, promoting fair distribution and transparency in tip allocation, Unite Hospitality says it has found several ways in which employers are holding on to tips.
These include third-party deductions, with some employers using platforms which take administration fees from tips. Unite says this directly undermines the principle that tips are the property of workers.
Employers also can still treat service charges as company income rather than distributing them as tips, which Unite claims is creating confusion for customers and leaving workers with little say.
What’s more, the Act allows tips to be held for up to a month before being paid out, which Unite says is far too long for workers in low-paid, insecure jobs who need immediate access to their earning.
Through its Fair Tips, Fair Pay campaign, Unite is now calling on Labour to strengthen the Act, including:
- Bringing in an outright ban on all deductions – no admin fees, no employer skimming, no ‘cost recovery’ clauses.
- A statutory right for workers to elect tronc masters and committees, with clear protections against employer interference. A tronc is a central pool for payments made to employees at work.
- Real-time transparency – tips must be itemised and paid with wages, not weeks later.
- Stronger legal rights for unions to access workplaces and gain recognition in sectors where tips are routinely stolen.
- Collective enforcement rights – unions must be able to bring claims on behalf of groups of workers, reducing the burden on isolated individuals.
- The introduction of fines and penalties that make it more costly for employers to break the law than to comply.
Unite hospitality lead organiser Bryan Simpson said: “The first year of this act has shown that legislation on paper is never enough. Since it came into force, employers have adapted, using new mechanisms to deduct from and maintain control over tips.
“Tips belong to workers – and workers, through their unions, should control how they are shared. It’s time for the government to finish the job and deliver the protections that were promised.”
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