May 11, 2016

UK government announces plans to allow workers to keep tips

Restaurants in the UK will be obliged to hand over tips to their employees, following a government review.

The review was prompted by media reports last year that several high-profile British restaurant chains were withholding tips paid by customers to waiting staff, or deducting an admin fee.

The government, which has launched a public consultation on its proposals, also wants to make it clearer to consumers that tipping is discretionary.

Announcing the reforms, business minister Sajid Javid commented: “Today I’m setting out our proposals to make tipping fairer, clamping down on unfair practices and securing a better deal for the millions of workers in the service industry. We will look closely at all the options, including legislation if necessary.”

Dave Turnbull of the trade union Unite said the government proposals were a “massive victory for all those waiting staff who have worked tirelessly to expose sharp practices in the hospitality industry.”

The UK recently increased its minimum wage for over-25s. It was subsequently reported that several hospitality chains have cut staff perks, including paid lunch breaks and free food, in response.

Armin Falk has written for IZA World of Labor about the importance of fair treatment to employee motivation. He writes: “new research has indicated that workers are motivated not just by wages per se, but also by their perceptions of how fair their wages are. Firms that emphasize the fair treatment of workers with regard to wages and other workplace conditions may produce better outcomes for both themselves and their workers.”

The UK government’s consultation document can be accessed here.

Related article:
Fairness and motivation by Armin Falk
Find more IZA World of Labor articles on personnel economics