How does tipping culture work in the UK?

Most hospitality workers rely on tips to top up their income

Most hospitality workers are paid the National Minimum Living Wage (Getty Images)

Trade Unions are preparing to step up campaigning to help hospitality staff amid reports that plans to force businesses to hand over all tips to their workers could be shelved.

Last September, the government announced that it intended to overhaul tipping practices across the UK in a bid to provide a “financial boost” to hospitality staff.

It said it would make it illegal for employers to withhold tips from their workers after research showed that many businesses were keeping all of part of service charges added to customer’s bills.

At the time, the government said the move would help around two million people working across hospitality, leisure and services sectors.

But the policy change is not expected to be included in the Queen’s Speech on 10 May, as first reported by the Financial Times.

The news has frustrated trade unions, with Trades Union Congress declaring it would be a betrayal of the “lowest-paid and most vulnerable workers in England”.

Unite union general secretary Sharon Graham commented: “Every year this government promises action to ensure fair tipping - and then does precisely nothing to deliver on that promise.

“A hospitality worker can lose thousands of pounds a year from their earnings when the employer refuses to hand over their tips.

“In a sector notorious for long hours and low wages, tipping misappropriation is another abuse. If the Government won’t fix it, Unite will.”

A spokesperson for the Department for Business, Energy and Industrial Strategy did not confirm whether changes to tipping practices will be included in the Queen’s Speech when contacted by The Independent.

“Workers should absolutely get the tips they deserve, and customers should have reassurance that their money is rewarding staff for their hard work and good service,” they said.

Is tipping a legal obligation?

Consumers in the UK are not legally obligated to leave a tip.

However, many staff working in the hospitality industry are paid the National Living Wage or National Minimum Wage. Therefore, tipping is strongly encouraged.

A 2019 survey, carried out by UK accountancy firm WMT, found that 95 per cent of consumers leave a tip when dining out, with 79 per cent tipping between five-15 per cent of the total bill.

Almost eight out of 10 people said they prefer to leave tips in cash, as they believe these are most likely to reach waiting staff as opposed to being kept by the restaurant operator.

What is service charge and how is it different to tips?

Service charges, which are not the same as a tip, are added to bills in restaurants either as “discretionary” or “compulsory”.

These charges are typically 12.5 per cent of the total bill but can range between 10 and 20 per cent.

The service charge may be used by businesses to pay their staff tips, but they can also be used to cover administrative costs, insurance costs and general upkeep and maintenance.

As it stands, there are no specific legal rules regarding the proportion of service charge payments that must go to hospitality workers.

This means that service charges are paid directly to a business, and it is up to the business owner to decide how much is passed on to employees.

A 2016 consultation, launched by the Department for Business, Energy and Industrial Strategy, found that employers were “often” retaining all service charge payments.

It also found that the presence of a service charge on a restaurant bill puts off many diners from leaving tips directly for their waiter.

What happens if I tip by card?

As contactless payments become increasingly more common following the pandemic, many may wish to tip by card. But you may wonder how these tips reach hospitality staff.

Some businesses pool these tips together and then divide them among staff through a “tronc” system.

Businesses will typically designate a staff member, usually a waiter, to share these out.

How can I ensure my tip reaches my waiter?

Without changes to the current law, the best way to tip is to give cash directly to your waiter.

Some businesses allow individual waiters to keep all their tips, while others will pool tips together and divide them equally among staff.

Without legal framework obligating businesses to pass on discretionary charges to staff, leaving a tip separate to the service charge is the best way to ensure that the person serving you receives the payment.