What will this mean for the handling of tips?
Today’s Queen’s speech has had a glaring omission with no mention of the Employment Right’s Bill she announced back in December 2019.
There are many areas that this proposed bill covered, and Unions are up in arms about its delay, but one area that affects our hospitality clients was the proposal that 100% of tips should be retained by the employees. This would include tips on bills paid on credit cards, where fees or handling charges are applied. It is common for employers to deduct such costs from payments of tips to staff and the new legislation would have put a stop to this and meant additional costs for employers.
What does this mean for employers?
This may mean the pressure is off for employers to ensure 100% of tips go to their employees, although we are awaiting confirmation from the Government as to what the plan is for the Employment Rights Bill.
Despite the delay, the Bill did highlight an issue with tips being given on card payments. A trend that has risen sharply with contactless and card payment now being preferred for payments due to the social distancing requirements.
Whether it is legal requirement, or a commitment to ‘do right’ by staff for the tips they receive, having a way of managing tips that is both cost effective for the employer ad fair for the employee is something we are seeing becoming increasingly popular.
In our blog ‘How can businesses recoup costs if legislation requires 100% of tips to go to employees?’ we explain how a tronc scheme is a tax effective way of managing tips, whatever the future legislation holds.
We wait for official news on what the future of the Employment Rights Bill is, and what impact it will have on the issue of tips and gratuities and will keep you updated as soon as we have more clarification.
If you would like to find out more about how to set up a compliant and tax-effective tronc scheme, please contact our sister company TroncMasters who specialise in tronc related services.