The UK government formally backed the Employment (Allocation of Tips) Bill at its second reading in parliament on Friday, where it was passed by MPs.

By making it unlawful for businesses to withhold well-earned service charges from their employees, the new bill, once in law, will ensure that all tips, gratuities and service charges paid by customers are distributed to the staff. The bill would amend the Employment Rights Act 1996 to insert new legal obligations on employers.

It would benefit more than 2 million workers and will give them the right to request their employers’ tipping records (section 27J(3)). Additionally, under section 27K, a worker may bring before an employment tribunal their employer’s noncompliance with sections 27D and 27G, on how and when tips etc. must be dealt with, respectively. There will also be a new statutory Code of Practice to provide guidance to businesses and staff on the distribution of tips.

MP for Watford Dean Russel, who introduced the bill, said:

I am delighted that my Tips Bill has passed second reading in Parliament. It is fantastic that we are on track to securing a fair deal for millions of people working in hospitality across the country.

It has always felt wrong that some employers have retained tips intended for their staff. This new legislation will halt this practice, particularly given the current challenges around the cost of living. I would like to thank all of the businesses and stakeholders that have got in touch to voice their support.

Workers in the hospitality, leisure and service sectors, who heavily rely on tips, stand to benefit from this reform. It will in turn assist to reduce the pressures generated by global inflation and an increase in the cost of living.