Employment (Allocation of Tips) Bill

Dean Russell Excerpts

2nd reading
Friday 15th July 2022 Commons Chamber

[Dean Russell (Watford) (Con)]

I beg to move, That the Bill be now read a Second time.

I am incredibly pleased that we have time today to debate this important issue and Bill. I am the Member of Parliament for Watford, which has a thriving hospitality and service sector. That means that many of my constituents, and those from surrounding areas, work in roles where tips, gratuities and service charges are given to them—for the simplicity of my speech I will refer to those things as tips from now on, rather than give the full list.

For individuals who work in those roles, tips are an important part of receiving a thank you, and in many cases they are a token gesture from customers. Across Watford, not only do many people working in hospitality receive tips, but probably everyone—we are a very generous constituency—will have given a tip over the past few years. I was shocked when I found out, especially during the summer period after lockdown when we could reopen restaurants and were able to go back out and give tips, that hospitality workers could not necessarily guarantee that they could keep them. I think most people would be shocked to know that if they gave a tip through the business—via a credit card, say, as is increasingly more prominent and popular—there is no guarantee that the person or team they gave it to would receive it.

Of course, in most instances businesses are fair and kind and ensure that those tips get to the staff who were given them. Sadly, however, we know that there are always those who are unscrupulous and unfair and will choose to exploit their staff and keep the tips for themselves, sometimes in part, sometimes in full.

[Ms Lyn Brown (West Ham) (Lab)]

I congratulate the hon. Gentleman on bringing forward this Bill. It is certainly one I support, and hopefully a final victory for the long-running fair tips campaign run by Unite the Union. As he says, however, we know that some employers can be extraordinarily devious in exploiting loopholes in employment law at the expense of either the public purse or workers. What consideration is he giving to future-proofing this Bill to make it really difficult for operators, including those using digital platforms such as Deliveroo, for example, to avoid the spirit of such important legislation?

[Dean Russell]

I thank the hon. Member—I would like to say friend—for her question. I will come to that later, but it sits within the code of practice and ensuring that at the heart of this Bill is a word she will hear me repeat many times: fairness. That is baked into the approach that will be taken. As I will say later, I am looking forward to meeting businesses, sector representatives and unions to chat about how we make that code of practice work well and ensure it is fair for everyone involved.

As hon. Members will know, over the past few months media reports have highlighted that the taking of tips, especially via credit cards, and businesses taking more than their fair share—indeed, taking a share of something they should not even be getting—is increasing. One of the reasons that concerns me, and why this Bill is so important not just in principle but right now and should be enacted as soon as possible, is that we are seeing a rise in the cost of living.

People who work in hospitality should not need to rely on tips as part of their salary. I am absolutely clear in the Bill that it is not about topping up salaries; it is about a gratuity, tip or service charge in addition. However, employees should be able to keep them. That should be at the heart of what we do, and that is what this Bill will do. That is why I say that fairness is key, because we all have a sense of fairness. We know what is right and wrong, and we know that if we give somebody some money to say thank you, they should be able to keep that money or choose to share it with others. That is key. A great deal of work has been done over the past few weeks to try to get this proposed legislation right, and I hope that people will see that in the Bill and that the code of practice will cover that.

[Mary Robinson (Cheadle) (Con)]

I am grateful to my hon. Friend for bringing this important and overdue Bill to the House. We are all thinking of the people in hospitality who will benefit from it. I have been contacted by constituents who have had up to 15% of tips removed from their pay packet. Obviously, this Bill will address that. However, this measure will also matter to members of the public too. How many of us ask when we go to pay our bill, “Will the tips go directly to the person who has given us such great service tonight?” yet do not know whether the answer we get will be correct? This Bill will ensure that we have that security and that people paying their bill can trust that that tip will go to the person who has given them that service. I hope that my hon. Friend will have every success with this Bill, and that it will be backed up with a media campaign to let people know that their tips will go to the person who actually deserves them.

[Dean Russell]

My hon. Friend makes a brilliant point. I thank her so much for her endorsement and support, and for representing her constituents. I have heard the same stories from so many Members. In fact, a lot of Members—I will not name them—tell me that they worked in hospitality when they were students, and have experienced this issue; it really cuts through. On my hon. Friend’s point about a media campaign, I invite colleagues from across the House to help me promote this legislation as widely as possible. I hope that in a year’s time—hopefully sooner, but it might be a bit later—we get to the day when a customer never again has to ask, “Will you definitely be able to keep this tip?” That is one of the ambitions of the Bill.

The Bill is not about bashing business. Most businesses comprise good people, good entrepreneurs and good CEOs, and most pass on tips fairly. The businesses that I have spoken to—especially in my constituency and through fantastic Members of Parliament across the House—support the legislation, and hospitality businesses definitely do so.

Let me turn to fairness for workers, which is covered in several aspects of the Bill.

[Christina Rees (Neath) (Lab/Co-op)]

I congratulate the hon. Member on bringing this excellent Bill to the House. Fairness is the key word. He has mentioned that he is working with businesses and trade unions. I am a Labour and Co-operative party MP. May I ask whether he has reached out to the Co-operative party? Many businesses are co-operatives, and I am sure the Co-operative party would be grateful if he reached out to it.

[Dean Russell]

The hon. Member makes a brilliant point. The idea of the code of practice is to ensure that we do that engagement, and I am hopeful that when we reach out to such organisations, they will help with the media campaign. We need to ensure that everybody knows about the legislation and to highlight that there are businesses that do not pass on tips. In the meantime, I hope that people challenge businesses on that when they speak to them.

The Bill will provide greater transparency for employers and workers in teams regarding how tips should be treated; that will be clear to everyone. It will create a level playing field for the majority of businesses that already pass on tips to workers fairly and transparently, ensuring that they know that other businesses will do the same as they have always done. As we have already mentioned, through the Bill consumers will have the confidence that the full value of their tips will go to workers, and the premise of the Bill is that 100% of tips will go to the workers. The code of practice will agree how that will be shared, and we can turn to that point later.

[Jill Mortimer (Hartlepool) (Con)]

May I speak on behalf of all the backroom staff in hospitality venues? As a teenager, my son worked for many years as a pot washer for very little money, but he always felt really appreciated when he got the little top-up that was his share of the tips. We should remember all those people and how important it is to them to know that they are valued.

[Dean Russell]

Absolutely. I thank my hon. Friend for her contribution. May I also mention the fabulous staff in this place? I know that on occasion, some very kind Members of Parliament do give tips, even though it might not be reported.

I have covered some points around fairness for workers, but I will go into a little more detail. The Bill will create a legal obligation for employers that receive tips directly from customers, or that have control or significant influence over the distribution of tips that workers receive directly, to distribute tips to workers fairly and transparently. The obligation will be attached to the total amount of the qualifying tips paid at, or otherwise attributable to, an employer’s place of business, and the tips must be allocated fairly between workers at that place of business. For example, in the case of a big chain, the tip will go into a pot to be distributed to everyone who works not in the chain, but at that particular venue.

Importantly, the situation will remain the same in cases where employers do not receive, or have control or significant influence over, tips. For example, the Bill will not cover me giving a tenner directly to a waiter or waitress at the end of a meal, as it is clear that it is for them. However, the Bill would come into force if they put the money through the business, perhaps via a credit card payment. Similarly, the Bill will not cover situations where employees already have their own tip jar that they look after, because those tips will not be touched by the business.

Fairness is key to ensuring that businesses and employees know exactly where they stand, but we also need to ensure that there is some flexibility. Every business is different—that is the nature of it. Someone working in hairdressing is going to have a different approach to the way they receive or manage tips from someone who works in a restaurant, bar or hotel. What we are trying to do with the code of conduct is to make sure that that is covered, and I hope that is going to come after this Bill today—

[Mark Jenkinson (Workington) (Con)]

I am sorry to interrupt my hon. Friend in mid flow. As someone who has had many an argument with restaurant managers about removing service charges in London, in order to be able to give cash directly to staff, and nearly been thrown out of restaurants for it, may I put on record my congratulations to him on bringing this Bill to the House today? Let me also add my thanks on behalf of all the hospitality industry workers in my constituency and across the wider Cumbrian area who will benefit from this.

[Dean Russell]

I thank my hon. Friend for that. He stands up so strongly for workers and for the rights of people across this whole country, but particularly in his constituency. I am very conscious that there is a thing called the tronc system, although I will not go into too much detail on it now because of the time available. Tronc is an arrangement commonly used in the hospitality sector, where an employer delegates the collection, allocation and distribution of tips to a person or persons known as a “troncmaster” or tronc operator. The Bill does not seek to regulate the operators of independent tronc systems, which are commonly used by many businesses already. However, I raised this matter when I was talking through how to make this Bill the best it can be and I found that some stakeholders have been concerned about whether a business could then put pressure on a troncmaster to do something that is unfair. So, to mitigate that risk, under this Bill workers can bring an employment tribunal claim if an employer’s use of an independent tronc is not fair. I hope that that will capture any concerns on that front.

As we have just discussed briefly, another aspect of fairness is ensuring that there are no deductions from tips. So at the core of the Bill is the creation of a legal obligation for employers to distribute all tips, gratuities and service charges to workers, without any deductions. When customers pay service charges, they expect that money to go in full to the staff and to the individuals they have asked it to go to. Sadly, some employers retain part or the whole service charge without passing it on to their workers, so this Bill will deal with that. Some hon. Members have asked me whether this legislation will also cover credit card deductions and administrative costs, and some businesses have raised that issue with me too. Since 2018, payment processing fees cannot be passed on to consumers. In line with that, employers will not be able to deduct payment processing fees from tips––that also includes mandatory and discretionary service charges which are added automatically on to customers’ bills by some hospitality venues. My hon. Friend the Member for Workington (Mark Jenkinson) will be relieved that that will no longer be the case, as he has probably had arguments on that front in the past. Administering tips should not impose significantly on a business’s operating costs, but that credit card admin charge might be significant for an individual. Two or three payments can be significant for an individual when we are talking about tips. So, again, this is about fairness; businesses do not incur a significant cost in respect of this money from tips, but if it were taken off the staff, it would be significant for them. It is important to include that provision in the Bill and to put what I have just set out on the record.

Ensuring that tips are passed on to workers in full, with no deductions by employers, will make a real difference to workers’ lives, while not creating a burden on businesses. As I noted earlier, an important practical aspect of the Bill will be the code of practice, which I will expand upon now for a few moments. The Bill includes provisions for the Secretary of State to issue a statutory code of practice, which will promote fairness and transparency in relation to the distribution of qualifying tips, and help tribunals determine whether it is fair for an employer to make certain tronc arrangements. Employment tribunals must have regard to relevant provisions of the code when determining whether an allocation of tips or making of certain tronc arrangements is fair. The code will consider some of the factors that may be relevant to fairness and will provide a number of examples and real-life scenarios that exemplify fair tipping practices, to help reflect the myriad circumstances in which employers can handle tips in an acceptable fashion. The hon. Member for Neath (Christina Rees) mentioned engagement, so let me say that the code will be published in draft and consulted on before the relevant sections of this legislation come into force. The code will also require approval from both Houses of Parliament. I hope that that reassures colleagues across the House that there will be scrutiny and that we will ensure that it is covered fully. The defining principles of the Bill will need to capture the nuances of fairness. As I have mentioned, I want to engage widely to ensure that the code of practice really works. I welcome anyone reaching out to me after Second Reading. If the Government and the Minister support the Bill going through to the next stage, and the House joins us in that approach, I will be really keen to engage and hear hon. Members’ points.

One of the core issues is remedies and enforcement. Crucially, the Bill will be enforced by workers through the employment tribunal system and will provide employment tribunals with remedies where an employer has made deductions from tips or has not allocated tips in a fair and transparent way. If an employer does not allocate tips fairly among workers, the employment tribunal can make an order that does one of three things: require the employer to revise any allocation of tips that they have made, recommend that the employer deals with tips in a certain way, or require the employer to make a payment to one or more workers so that they receive the tips that they should have received.

The employment tribunal may additionally compensate workers by up to £5,000 for related financial loss attributable to a breach of the provisions. Workers will also be able to make a complaint to an employment tribunal if their employer does not keep sufficient records relating to tipping practices; the tribunal can order the employer to compensate workers by up to £5,000. It is worth noting that workers must consult ACAS before bringing forward a claim. The majority of employment disputes are settled before they reach an employment tribunal.

I would like it to be absolutely clear that nothing in the Bill will make changes to taxation for employers or employees. It is purely about employees’ rights and workers’ rights.

I will conclude my remarks because I want to hear the fantastic speeches that are no doubt coming up. I thank the Minister and her predecessor, my hon. Friend the Member for Sutton and Cheam (Paul Scully), for their incredible support with the Bill; I hope that I can convince colleagues to get it over the line today. I thank everyone who has helped me to introduce it to the House: hon. Members past and present, constituents and my fabulous Watford businesses and residents, who have repeatedly raised the importance of the issue. As we are all aware, the private Members’ Bill process is fragile, so I am keen to work with all hon. Members, all organisations and everyone I can to make sure that the Bill works. I urge the Minister to support it.

[Mr Deputy Speaker (Mr Nigel Evans)]

We have all learned a new word today: “tronc”, which I will try in Wordle later.

--- Later in debate ---

[Dean Russell]

With the leave of the House, I thank all hon. Members for their contributions. We heard from my hon. Friend the Member for Kensington (Felicity Buchan), an intervention from the hon. Member for Neath (Christina Rees), and from my hon. Friend the Member for Meriden (Saqib Bhatti)—I did not realise I was one of the great west midlands exports, but that is wonderful to know. We also heard from my hon. Friends the Members for Broxtowe (Darren Henry) and for Hartlepool (Jill Mortimer)—I will endeavour to attend the Riviera as soon as I can.

I particularly liked the speech from my hon. Friend the Member for Charnwood (Edward Argar). In his previous role, in which he was always fantastic, I would normally be lobbying him about my hospital, so it is wonderful to hear him talking about hospitality instead—slightly different. We also heard from the shadow Minister, the hon. Member for Bristol East (Kerry McCarthy), and the hon. Member for Glasgow South West (Chris Stephens). I give my heartfelt thanks to the Minister, at the end of her incredibly successful first week in the role, for signalling the Government’s support for the Bill. To know that we will hopefully change the lives of many millions of people across the UK is incredible.

I hope that hon. Members on both sides of the House agree that this is an important piece of legislation to ensure fairness and transparency for workers and employers. I am hugely grateful to everyone who has campaigned and fought for tips to be fairly given to workers for such a long time; it is wonderful to know that I am standing on the shoulders of giants. The Bill represents a great opportunity to tackle the rising cost of living, to increase consumer confidence and to help ensure that hard-working individuals get the money they have been given and deserve. I hope this Bill will go through the House with full support, and when giving a tip as a thank you at the end of meal I look forward to not having to say, “Will you get all of this?” Hopefully that day will come in the next few months. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).

Employment (Allocation of Tips) Bill

Dean Russell Excerpts

Committee stage
Wednesday 12th October 2022 Public Bill Committees

[The Chair]

Okay. I understand that the shadow Minister has a personal issue that means she is unable to be here this morning, so I call the Minister.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Dean Russell)]

It is an absolute pleasure to serve under your guidance, Ms McDonagh.

As has been kindly noted, until recently I was the policy sponsor for this Bill; I am honoured to be the responsible Minister and to see it through the whole way. I thank my hon. Friend the Member for Ynys Môn for stepping in to sponsor the Bill, and I thank the other Committee members for their time and energy. Personally, it means a lot to me, and it will mean immense amounts to the millions of workers we will help by getting the Bill through Parliament. It will make a difference to them.

This is about fairness. The issue of protecting workers’ tips is not only close to my heart but incredibly important to so many. I am grateful that we have cross-party support, as indicated today and on Second Reading, to help to take the Bill forward.

[Judith Cummins (Bradford South) (Lab)]

I welcome the Minister to his place. Will he outline the broad support that the Bill has received not only from individual trade unions but, importantly, from the TUC?

[Dean Russell]

I thank the hon. Lady for her comments. It has been fantastic to engage with all those groups and I am immensely grateful to all those who have lobbied and pushed for this legislation. I will come to this point later in my speech, but the Government originally explored this issue in 2015, and the discussion goes back way longer than that. I am grateful to everyone who has been involved. I am not sure whether I am allowed to allude to myself as the hon. Member for Watford, but in his speech on Second Reading the hon. Member for Watford said that he felt very much that he was standing of the shoulders of giants, as I do, and we really are. This change has long been fought for and I am pleased that the Government listened to me when I was a Back Bencher. I am now very pleased to be the one listening and helping to make this change happen.

This change is happening because many people were appalled to hear the stories over the past few years of bosses wrongfully pocketing tips that were intended for workers. The money left by customers who wanted to recognise the hard work and excellent service of staff was taken by businesses; at times they took up to 10%, and we heard about the awful, nefarious practice of staff not receiving tips at all. The Bill will stop that practice. The Government believe that tips should go to the workers who earn them and that businesses that withhold tips from staff wrongfully benefit from money that is intended for hard-working staff.

Ultimately, the Bill will stop that conversation we have at the end of a meal or after having received good service—I think we have all said, “Are you definitely going to get this tip?” It is important that the Bill will end that conversation.

[Ian Levy (Blyth Valley) (Con)]

Does my hon. Friend agree that the Bill will encourage people who work in the hospitality industry to realise that they are actually going to get the tips for the service they give? In itself, that will encourage better service, because it will give people that feeling that they want to put more into the job.

[Dean Russell]

Absolutely. The Bill will give everyone certainty: in a time of particular uncertainty, especially as we face the cost of living crisis, people will know where they stand. Of course, it will take some time for the legislation fully to come into force, but organisations should put measures in place now rather than wait for the law to change. That is how it should have been anyway, but the Bill will make sure that businesses with bad practices deliver the right thing in the short term and onwards.

[Mary Robinson (Cheadle) (Con)]

I was pleased to be in the Chamber to support my hon. Friend when he was the promoter of this much-needed Bill, so it is great to see him in his place to take it even further. First, how will we ensure that the 2 million people we are trying to help with the Bill get the message? Will the Government run a public relations campaign to ensure that those people know their rights? Secondly, some unscrupulous employers will not treat people in the right way, so it is good to see in the Bill clauses to protect people who could be affected. Of course, some people end up in employment tribunals because they have been sacked or unfairly dismissed because they have complained about a process, so will the Minister, in his new position, also advocate for whistleblowers, to ensure that they too get the right protections in law?

[Dean Russell]

I know how important my hon. Friend’s campaigning on whistleblowing is for her and I appreciate her raising it. I will come to the tribunal process later in my speech. In terms of communications, it has been wonderful that, from the early stages of the Bill, the media have been very active in promoting it, and I know that the Government have been very much promoting it. This is also about transparency, which I will come to, in terms of not only ensuring that businesses are clear with their staff but making it clear to the public that members of staff will be keeping 100% of their tips. That is a key part of the Bill that it is so important to get across: 100% of their tips—everything that they are given—should be shared fairly with staff.

I will continue with my speech, so that we can come to a close. All the points that have been made show why the Government stand resolutely behind the Bill. We want to see it enacted, benefiting millions of workers in industries where tipping is common, such as hospitality, which is such a huge workplace for so many. My hon. Friend the Member for Ynys Môn has set out how the clauses protect workers and why that is so important, and I am pleased to say that the Government support all the clauses. I will reiterate a few points on why they should stand part of the Bill.

The Bill will prevent employers from making any deductions when distributing tips, apart from those required or permitted by existing legislation, such as under tax law. That ensures that all money left by customers is passed to workers in full—I reiterate the words “in full” as often as I can. The Bill also establishes a requirement to allocate tips fairly—fairness is at the heart of the Bill—between workers at a place of business. That protects vulnerable workers and prevents exploitation.

A statutory code of practice will help to promote fair allocation of tips. The code will be developed with the help of key stakeholders and will be subject to a full consultation period before the final version is brought to both Houses for approval. On the point that my hon. Friend the Member for Cheadle made, that consultation is key, because it will help to raise awareness of what organisations and workers want but also make them aware that this is going to happen across all the sectors affected. It will ensure that the diverse views and practices of stakeholders are taken into account in preparing the code. To support enforcement of these new requirements and hold employers to account, the Bill will also require employers to have a written policy on tips and to maintain records relating to tips. These measures will be enforced by employment tribunals, with the tribunal empowered to revise allocations of tips and order compensation of workers.

The hon. Member for Glasgow East, who is not in his place, made some wonderful comments, and I reiterate my thanks to him for them. He asked why this legislation is not being brought forward as part of an employment Bill and is, instead, a private Member’s Bill. The Bill highlights a very important issue, and I am pleased to say that there is cross-party consensus that tips should be fairly attributed to workers. I know, because I felt it at the time, that it was disappointing that the Queen’s Speech did not include an employment Bill for the third Session of this Parliament, but we remain committed to bringing forward legislation to deliver on our commitments on employment rights, and I know that there are several other pieces of legislation coming through.

[Chris Stephens]

I am grateful to the Minister, who is, as always, generous in taking interventions. A number of Members have stepped in where the Government have not acted—a number of private Members’ Bills are being tabled that address issues of employment and workers’ rights. Will the Minister commit to look at those pieces of legislation and meet the hon. Members who have put them forward, so that we can tackle some of the issues and injustices that take place at work?

[Dean Russell]

I thank the hon. Member for his comments. I am always happy to meet Members and discuss how they feel we can create better workplaces and support workers’ rights. I already have many meetings with colleagues to ensure that we are heading in the right direction on that.

With regard to the comments made by the hon. Member for Glasgow East, I want to be clear that more needs to be done to ensure that tips earned by workers go to them in full, which is why the Government are supporting the Bill. I am incredibly grateful to my hon. Friend the Member for Ynys Môn for taking forward this legislation.

I also note the comments made by my hon. Friend the Member for Dewsbury about his son, Liam. I know he is a proud father of Liam; he regularly talks about how proud he is of him. Liam is a credit to him, with the work he is doing while at university. The key point my hon. Friend made is that this is not about topping up salaries. That is an important point in the Bill, and it is important that we communicate it. This is a gratuity, tip or service charge that is a “thank you” on top of a salary. It should never be used by employers, and the Bill makes it clear that this is not about topping up salaries; it is about an additional piece and making sure that workers receive tips fairly and squarely.

I will now conclude, because we have covered a lot of ground and I am very pleased with the feedback from the Committee. The Bill provides vital protection for low-paid workers. Bringing forward these new rules will protect over 2 million workers from bad bosses and give them an avenue to seek remedies. It will be good for businesses too, as they will be confident that they are not being undercut by companies where bosses are keeping tips for themselves. The Bill is an excellent step. My hon. Friend the Member for Ynys Môn has received support from both sides in the House and in Committee, and I want to thank everyone for the collaborative way we have all worked, for the way that the feedback has come in and for their support inside and outside the Chamber to make sure that workers are protected in this way. I look forward to following the Bill through its parliamentary stages.

[Virginia Crosbie]

This House is at its best when people work together, and the Committee has been a shining example of that co-operation and collaboration. I thank all hon. Members who have been on this short Committee. As a Welsh MP, I am delighted that there are two other Welsh MPs, both of whom are women, on the Committee. Tourism is a key sector in Wales, contributing around 12% of all employment.

I thank those who contributed to the debate. My hon. Friend the Member for Dewsbury talked about his son Liam, who has had a very positive experience in the hospitality sector. The hon. Member for Glasgow East talked about a level playing field, and I congratulate him on his private Member’s Bill on neonatal care. The hon. Member for Glasgow South West talked about the support of the unions, and Kate Nicholls, who heads up UK Hospitality, has been very helpful with the Bill. My hon. Friend the Member for Blyth Valley talked about fairness, and my hon. Friend the Member for Cheadle talked about the importance of a PR campaign and whistleblowing.

This is an important Bill, which enshrines a right that seems evident to many consumers already, and I am sure hon. Members will agree that it is not right that business owners can keep part or all of the tips given in good faith to workers by customers who recognise the good service they have received.

Employment (Allocation of Tips) Bill

Dean Russell Excerpts

3rd reading
Friday 20th January 2023 Commons Chamber

[Dean Russell (Watford) (Con)]

I stand here today as a very happy man, but not without a certain trepidation, as I know the fragility of the private Members’ Bills process—even at this stage.

I begin by thanking the current Minister, the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), and those who came before me in my short period in the role, for making sure that the Bill is in front of us today and has Government support. I particularly thank my hon. Friend the Member for Ynys Môn (Virginia Crosbie) for her work. To reuse a phrase slightly incorrectly—but I think it is true in this case—she took the Bill by the horns and made sure that we took it forward in such a way that it got here today. The truth is that, when I was made a Minister and was looking for somebody to take over this private Member’s Bill, I could not think of a better person in the UK, or potentially the world, to get behind it. I know how important hospitality is to her constituents and constituency. The power that she has used to get the Bill to this stage is incredible. As well as being an ambassador for the Bill, she has championed it to an extent that many would not have been able to achieve.

I will speak briefly about the purpose of the Bill and how it came about, because we need to recognise its importance. For many years, many of us have given tips in restaurants and similar, and as we hand over the money, put money in the tip jar or pay on a credit card machine, we often end the conversation by asking: “Are you sure you’re going to get this? Will you and your team get this tip? That has become part of the national conversation whenever giving a tip. There is a lack of surety about whether the tip will reach the people who have been serving or cooking. This Bill will help put an end to that question. We will no longer need to ask it, and members of staff will no longer need to worry whether they will receive the tip.

The birth of this Bill was mentioned in the excellent previous speech. The measure is not something that I came up with; it has been gestating in government and society for many years. Last May, Quentin Letts wrote a typically humorous and well-written piece about how snollygosters in the machine often slow down good Government policy and stop really positive Bills going through, whereas other laws, including those to raise taxes—that is not a dig at anyone—go through much more quickly. This Bill has been in the system for many years. As a result of the private Members’ Bills process, the work of Government and standing on the shoulders of giants, we are showing that when the right thing needs to be done, it does get done eventually.

The Bill’s power lies in the fact that it provides surety. It will result in 100% of the tip going to the workers. The next issue is how it is then divided. After this Bill is enacted and the code of practice becomes law and the tribunal process is introduced, work will be undertaken to provide organisations with a bunch of scenarios that they can refer to in order to ensure that the tips are shared fairly. The word “fairness” is at the heart of the 100%. This is about fairness. This is about the money going to the right people—the people we have given it to—and it is about them knowing that they are getting it and that there is no room for manoeuvre. It is as simple as that—100%—and fairness is absolutely key.

This is not about topping up salaries. The Bill is very clear—this was part of the work in the early stages with the fantastic civil servants—that this is not about saying that organisations can suddenly reduce the minimum wage and use tips to top up people’s salaries. A tip is a gratuity; it is a thank you, an addition. This is not about giving organisations the opportunity to treat is as part of a salary. I totally appreciate that, for many who go into the hospitality sector, the tip is part of what they see as income, but it should never be used to replace a salary or to top it up. It should be a thank you, an addition and a bonus to help those who work in the sector.

I am passionate about this private Member’s Bill, although it was my second attempt at promoting it. In Watford we have some fantastic hospitality organisations. We have new businesses such as The Beech House, along with older establishments such as Tarboush, L’Artista, the Essex Arms, Rhubarb Cafe and many others that I could list, but they all have a common thread. They all rely on people to come and work in those places—to work in hospitality, to wait on tables and to cook—and they also rely on customers knowing that they are going to have a fantastic experience and be grateful enough to want to give a tip at the end.

What I found during the pandemic was fascinating. We noticed that none of the places we went to, in my role as an MP and as someone who lives in Watford, was taking cash; or rather, most places were not. Increasingly, payment was by credit card. Again, the question was: what does that 12.5% service charge actually mean? Does it go to staff, or is it just for businesses to make a bit more money? In most places, most people we spoke to could not really give an answer. What is it actually for? Do we then give a tip on top of the credit card charge, or not? This Bill will make it absolutely clear. If it is a service charge, tip or gratuity, it will go to the staff.

I have heard people ask whether this change will create an extra burden for businesses—the word “burden” has been used a lot this week in debates on legislation affecting business. Actually, it will not be a burden for businesses. Most businesses do the right thing. Most businesses give the tips to their staff, and that is absolutely part of what they do, because many people in hospitality grew up working in the industry, will have had tips in the past and will therefore know how important it is for their staff to keep them. But there are a few businesses—including, sadly, from reports I have read, some large franchises—that do not make sure that their staff get those tips.

The vast majority of good businesses that pass on tips see this as a positive, not an extra burden, because they see that it creates a level playing field. Those businesses will know that other organisations cannot make extra profit out of the back pockets or wallets of the people who work for them. Not only is that utterly wrong, but it changes and games the system towards those engaged in bad practice versus those who do the right thing. Again, that is another important aspect of fairness in this Bill.

I will not talk for too long, even though I would love to talk for hours. There have been many ups and downs—at times I have felt my heart beating and thought, “Are we going to get this through? Is it going to actually happen?” I want to speak for as short a time as possible, to make sure we can hopefully pass the Bill on to the Lords, but I would like finally to make a point about workers’ rights. At the heart of this is workers’ rights and the young people in society, many of whom work in hospitality. But it is also about this place coming together. I always think that Friday debates are perhaps the most powerful, because we are all usually in some form of agreement, and the point-scoring party politics stays out of it. We have seen that with this Bill. As it has passed through this place, we have seen Members coming together, many of whom worked in hospitality when they were younger, have had experience of it, or have businesses in their own patch whose staff receive tips and gratuities.

If we can get the Bill through today—I urge all colleagues and the other place to please support it—it will make a difference to so many people. Not only will it make a difference to the million that have been quoted, to their friends and families, to the industry in its efforts to get more people to want to work or stay in it, and to businesses by ensuring that they are working on a level playing field; it will also show that, while it does sometimes take time to get legislation through this place, while it does sometimes get utterly frustrating and while, as Quentin Letts pointed out, it does sometimes look like the snollygosters might be winning, eventually one does get to the right place.

If we can get this through today, I will be really pleased, but so will society. I say thank you to the Ministers, thank you to the fantastic civil servants and a huge thank you to my hon. Friend the Member for Ynys Môn for the work that she has done.

--- Later in debate ---

[David Johnston]

I am even more grateful to my hon. Friend for asking that question. I am probably not quite as generous as they are in the US, where a 25% or 30% tip is now sometimes recommended on the bill. I would always err on the side of giving a good tip, even for average service, and an even better tip for exceptional service.

[Dean Russell]

I have been asked, as I am sure my hon. Friend has, whether the Bill will move us towards the US model of tipping. As I said earlier, it is important to note that this is not about making tips part of the salary. We want workers to have good salaries, and the minimum wage has been increased again. Tips are a top-up. They are an additional gratuity to say “thank you,” rather than being part of the salary. That has come up a few times.

[David Johnston]

My hon. Friend makes a couple of important points. On his first point about the US, it was a particularly bad practice when employers were using tips to try to meet the minimum wage. We have made great strides in increasing the national living wage in recent years. I think it has now hit £10.40; the Minister can correct me if I am wrong, but I believe it is at least £10. That is particularly important. If we went into a restaurant and bought a pizza for £10, and the member of staff said when we paid, “I’m going to take £2 of that £10 for the pizza and keep it for myself,” there would be outrage. There would be outrage about the reverse situation, and it is right that we should feel offended on behalf of staff who are working hard for these tips and not getting them.

My hon. Friend the Member for Cheadle (Mary Robinson) is right: this is not just about hospitality. She made an important point about nail bars, hairdressers and lots of other places that I have many of in my constituency, but I realise that this is, in large part, about hospitality. My constituency has a lot of hospitality venues—pubs, for example. There are only seven MPs who have more pubs in their constituency than I do. I have been trying to get around them all, and I am doing pretty well.

The hospitality industry is vital for the UK economy, and particularly for younger workers, ethnic minority workers and part-time workers. It is a very accessible industry for people to get their foot on the ladder and get some important skills. It is hard work, often involving someone being on their feet all day, in difficult conditions, and dealing with difficult customers. It might involve long hours. It is vital, and it is hard. People get good skills, and they should get all their tips.

It is a small minority of employers who are doing this. Most employers will feel, as we do, that staff should be given the tips for the work they have done. That small minority of employers are shooting themselves in the foot in many ways, because where an employee has a choice between different employers—of course, they do not always—the chances are that they will pick the one that will let them keep their tips. That is a perfectly logical decision to make, and it is probably the decision I would make. As we discussed earlier, just as the customer expects a tip to go to the staff, the staff think, “That wage may not be very high, but I’ll be able to earn more in tips.”

This debate reminds me of two other things that are relevant to the passage of this legislation. The first is unpaid internships. The hope with this Bill was that employers would not wait for it to take effect but would start to change their practices before the statutory code came into effect, because the attention on this issue would make those practices socially unacceptable. I hope that that has happened. This reminds me of unpaid internships, which have unfortunately been rife in the UK. They have also been rife in this place, by the way. One reason why we were slow at first to make progress on getting rid of unpaid internships was that the two groups we often need for campaigns use them a lot: politicians and the media. Both are usually very important for campaigns on issues, and both were using a lot of unpaid internships.

When we look across our professions—media, fashion and many others—we find people working for no money. Their employers would say that they were providing a great opportunity, because people in those positions were getting skills that they would need later in the workplace, but the fact is that someone needs a number of things to let them do an unpaid internship. As internships are concentrated in London, interns usually need to move there and will need accommodation. While they are doing work for their employer, they will need money from somewhere, so they will either be working two jobs—one paid for and one not—or, as has often happened, be from the wealthiest families, who can support their children by supplementing those internships. Those internships then lead to jobs, and those jobs look unrepresentative of the country of a whole because of who gets into them.

Again, it is a small proportion of employers doing those things, but as we have shone a light on the issue with the Bill, making it clear that it is not acceptable for employers to be taking their staff’s tips, we would hope that employers have already started to change their practices. None the less, the Bill is important, and I am glad that it is being brought in.

The second issue that I am reminded of is access to cash, which, as Members have touched on, is currently a big challenge. We have banks closing branches all over the country, we have cashpoints disappearing, and we have an assumption that everybody wants to do everything by card or online. I get quite a number of constituents writing to me—I am sure that we all do—who are really concerned about that. They really like to be able to use cash, they worry that it will disappear and they do not know what they will do about it.

That is relevant to the Bill because we have heard the odd voice in the hospitality industry saying that the Bill is not a good thing because there are cost pressures on the hospitality industry at the moment and that, when people pay on card, the business incurs fees for those transactions, so it is not right to let all of the money go to the staff. Their basic argument is, “They might tip on card. I am paying money for that charge, and you’re saying that I have to give the entire thing to the staff.” I am hugely sympathetic to the hospitality industry in lots of ways, but I am afraid that I am not sympathetic to that particular point. However, it does relate to access to cash.

By the way, we could all do a better job of carrying cash. There is a national issue of how we ensure that people who need cash always have access to it. However, on the point made by my hon. Friend the Member for Watford (Dean Russell) about whether I need to have cash to ensure that somebody will get their tip, the answer, as a result of the Bill, is no, but, none the less, they might appreciate it.

I am afraid that I really do not agree with places that have become card-only. I accept that it may be simpler for some people to pay by card—particularly younger generations, although I do not want to make an age-related comment because I know of plenty of people in their 70s and 80s who like using contactless—but we could all do a better job of carrying cash so that tips could be paid and received in it.

One way or the other, this is a hugely important Bill. I congratulate my hon. Friend the Member for Ynys Môn (Virginia Crosbie) as well as my hon. Friend the Member for Watford on the work that he did before on the Bill. Although we are talking about a small minority, we are doing an important thing to ensure that people are rewarded for the effort that they put in.

--- Later in debate ---

[Paul Howell (Sedgefield) (Con)]

I thank my hon. Friend the Member for Ynys Môn (Virginia Crosbie) for tabling the Bill, and my hon. Friend the Member for Watford (Dean Russell) for all the tremendous work that was done beforehand. As has been said several times already, this is such an important issue, and it is delightful that my hon. Friend the Member for Watford has been able to put in the time and commitment to get the Bill to the stage it is now at—I hope his heart can stop fluttering soon. Of course, it is always a pleasure to follow my hon. Friend the Member for North Devon (Selaine Saxby).

I said in relation to the previous Bill that I did not have much experience, but I have a little bit more experience of this one. My constituency of Sedgefield is 240 square miles, and contains a significant number of pubs, restaurants and hotels. I do not, unfortunately, have a great deal of awareness—apart from the odd visit—of nail bars or what the quality of service is there; I have had some engagement with the teams, maybe, but that is about as far as I have taken it.

It is fair to say that anyone paying a service charge, or giving a tip, as we would normally call it, expects it to go to the staff, but it is important in this discussion to understand who the staff are. In a multinational hotel chain, the owners are clearly distant, but in a lot of pubs and small restaurants the staff may be the owners. There is some differentiation, in that there could be one person in the family who owns it, and maybe he or she should not be getting the tips, but the other could be working behind the bar or serving the food, and clearly the distribution model—however we make it up—must be fair to them as well.

Certainly, a number of pubs either start as or evolve into quasi-restaurants because the owner is the chef. They have put the effort into the kitchen and they are providing the service of food. When we look at what generates a tip, particularly in a food environment, there are two clear dimensions: the quality of the food and the person-to-person service and delivery. It is important that all of that is considered.

[Dean Russell]

One key component of the Bill, assuming that we get it through today and the Lords agree with us, will be the code of practice, which will effectively set out a 12-week consultation—I believe it is 12 weeks, unless things have changed—with the hospitality industry and more broadly to ensure that there are scenarios that are practicable and work in reality for organisations and staff. Those scenarios can be referred to in tribunals, should things get to that point, but, hopefully, they will give many approaches for businesses, even before the Bill becomes law, to say, “This is the right way to do it.” The Bill does not try to offer a one-size-fits-all model; it is about making sure it works, but at its heart is fairness. If the tip is for the people who have served and cooked wonderful food, then fairness within that organisation means ensuring that that tip is shared fairly across them all, and they can refer to the code of practice as part of that.

[Paul Howell]

I thank my hon. Friend for his very valuable clarification of the direction of travel we hope the Bill will proceed in.

The point was made earlier that the Bill is about making sure people are fairly paid. We have seen in the past people trying to incorporate the tips as part of the justification for a minimum wage. That is wholly inappropriate and I think that is one of the drivers for this Bill, which reinforces the position that people can ensure they get the appropriate pay on their payslip for their work, with tips being a separate scenario that can be discussed and followed through.

We must factor in a number of considerations about where organisations have got to. I do not think many sectors of our economy have been harder hit than hospitality over the last few years, first by covid and then by subsequent problems with labour. That puts pressures on business, and unfortunately some businesses take a step to the side of where their morals should be. This Bill will help to give clarity to that space, so it is absolutely clear that the tips belong on one side of the equation and we do not have a situation, as was mentioned earlier, where businesses are competing with each other, but one is taking the tips and putting it into the profit pot—or the cost-covering pot—and the other is doing the right thing and passing those moneys on to where they belong.

To come back to the point about cash-only or contactless-only methods of payment, another benefit of the Bill is that it provides clarity. The method of payment should not influence whether somebody gets a tip. We have all been to organisations—not in my constituency, as my hon. Friend the Member for Wantage (David Johnston) said; it must have been when I was travelling—that say “card payment only” or “cash payment only”. When a customer walks into an organisation where that direction is given, it makes them think that there is an ulterior motive. Does the organisation want cash so that it does not always go through the books? Does the organisation want contactless so that it has control over all the tips? Those are the two extremes, and both thought processes are probably unfounded in most organisations, but it puts doubt into the customer’s mind as to an organisation’s motives. The Bill will hopefully take that uncertainty away from the customer, so they know that the right thing is being done and the whole tips agenda has no impact.

Many typically small organisations are affected by this issue, so the aggregate number of people involved is incredible; I understand that up to 1 million people could benefit from it and the stats imply that they could get about £200 a year each. That is a significant amount but as my hon. Friend said, I like to think that I tip people reasonably, so I would have thought that they would get significantly more than £200 in the year. There could easily be a significant benefit for the people who are providing excellent services in our organisations, so I commend the progress of the Bill.

My hon. Friend also said that he had tried to go to as many pubs and other places in his constituency as he could, as I do. I hope the House will excuse a slight digression on this, but sometimes that has unintended consequences. I do not think that I am a particularly heavy drinker, but when I go out, I have a couple of beers from time to time. Hon. Members may have seen the “Love Your Liver” campaign in the House earlier this week. I called in and I am now going to my GP, because apparently I need to be checked out. When people go out, they should be aware of the impact on their health, because they would not necessarily know—I do not think there is anything wrong with me, but a scan tells me that there could be, so I need to check it out. I apologise for the digression, but it seemed appropriate to put a shout out for the health agenda.

I appreciate the Bill’s intention, because it is about fairness and it takes away the need for concern and gives employees the legal right to go back and check, if necessary. I endorse the earlier point about the potential for publicising it to make sure that staff and employers are aware that there is a now a line in the sand that has a legal footprint behind it, and it is not just best practice. Of course, best practice attracts the best staff who will attract customers.

Anybody who has worked in any organisation—any manufacturing, trading or sales business—knows one thing above all else: the easiest customers are the repeat customers. If a business can repeat its customers, it will be more successful and sustainable. Why do customers come back? As I said, it is because of the quality of the product, typically food or drink in this context, and the quality of the service. If businesses look after their staff, pay them correctly and allow them to keep the tips that they have earned, they will have a more successful business. I commend the Bill to the House.

--- Later in debate ---

[James Grundy]

I thank my hon. Friend for clarifying that. I am afraid that I have never been to America, but I hope to have the opportunity to go.

As my hon. Friend the Member for Watford said, there is a difference between a tip and a service charge. It is important to consider them slightly differently. The main reason is that a tip is often voluntary, and if we feel that we have received bad service, we will simply not leave one. A tip is given to the individual who served us for their particular service—a token of thanks to them individually—whereas a service charge is, or should be, as my hon. Friend said, disbursed to the staff as a whole. Sometimes a service charge is not voluntary but appears on the bill, so it is not a personal choice. A distinction should be made on that.

Let me talk briefly about something that we have not mentioned. My hon. Friend the Member for Watford has said that further work will be done, so I hope that this will be given some consideration: any potential taxation of tips should be different from taxation of service charges. Tips are effectively gifts, which are taxed differently, so they should be considered in a slightly different manner from service charges. I realise that that is a slightly esoteric point—perhaps so esoteric that it may not have been considered in this debate or during the drafting of the provisions.

[Dean Russell]

Taxation is wholly separate from this Bill. The Bill is very much about BEIS. To give my hon. Friend some reassurance, what the Bill will not do is change anything on taxation.

[James Grundy]

I thank my hon. Friend for his clarification. I have covered most of the points I wish to cover. We have heard a number of very sensible and reasonable contributions. This Bill has overwhelming cross-Bench support. It is long overdue, but it is terribly sad that we have to legislate to deal with this problem. It is pretty cheap for businesses to try to take tips for themselves. It is my view that they are always meant for the staff, as a token of thanks to people for service above and beyond what should be expected.