New tipping law affects UK restaurants, taxis, pubs, cafes and hairdressers from October 1

Restaurants, pubs, cafes, taxi firms, hairdressers and hotels are bracing for the impact of a new tip-sharing law set to come into effect from October.

The new legislation, launching this Tuesday, will prohibit these businesses from withholding tips or service charge payments given by customers, whether in cash or card, from their employees.

Kate Nicholls, CEO of UK Hospitality, has said that businesses have been gradually preparing for this change and aligning with a best practice code endorsed by unions.

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Saxon Moseley, head of leisure and hospitality at consultancy RSM, warns that businesses who have been using the service charge to pay staff or offset wages will still need to pay their staff but won't be able to rely on this cash fund. "And in that scenario, margins will be hit, in some cases fairly drastically," he adds.

Michael Powner, employment partner at Charles Russell Speechlys, highlights the challenges of reaching an agreement, stating: "Employers need to ensure that what is agreed is 'fair' and that there is rational reasoning in place, while avoiding any potentially discriminatory rules.", reports Birmingham Live.

Bryan Simpson, a representative for hospitality staff at the Unite union, has also voiced his opinion on the matter.

He claimed that some were "deliberately misinterpreting the new fair tips legislation to suit business needs rather than the workers". "We will be doing everything in our power industrially, politically and legally to ensure that any unfair tipping policy is challenged," he stated.

The law aims to increase the income of approximately 2 million waiting staff and other hospitality workers. The government is introducing the law on Tuesday, over eight years after a ban was initially proposed.

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