The Employment (Allocation of Tips) Bill, or Tipping Bill, has received royal consent and passed into law, making the withholding of tips from staff illegal.
The government predicted that this would protect more than two million employees, as well as allowing them to view an employer's tipping record. It also suggested that this would free up £200m per year of otherwise deducted tips, to go back into the pockets of employees.
The measures are expected to come into practice in 2024, following a consultation and secondary legislation.
The Tipping Bill will see a statutory code of practice developed to provide businesses and staff with advice on how tips should now be distributed. Staff have also been given a right to request more information relating to an employer's record, allowing them to bring forward credible claims to an employment tribunal.
Kevin Hollinrake, business and trade minister, said: "As people face rising living costs, it is not right for employers to withhold tips from their hard-working employees.
"Whether you are pulling pints or delivering a pizza, this new law will ensure that staff receive a fair day’s pay for a fair day’s work – and it means customers can be confident their money is going to those who deserve it."
Dean Russell, Conservative MP for Watford, said: "I am very pleased that my Tips Bill has received Royal Assent. Hard-working people working in hospitality in Watford and across the country will be able to retain their tips, knowing that they will now have a fair deal.
"I have always had reservations that some employers kept tips which were earned by their staff. This new law will stop this immediately and will ensure that the tips are given to the individual staff member, or team."
Virginia Crosbie, Conservative MP for Ynys Môn, said: "I am pleased this bill is now law. Driving it forward was all about fairness for workers and for those who give tips for good service. It was never right that a minority of companies could pocket tips when the public wanted them to go to the person who served them or made their food.
"The law will now boost wages for what are often lower-paid jobs and not boost company profits at the expense of hard working staff. But it is also about valuing the people who do important jobs in our economy, especially in tourist areas like Anglesey, and I am proud to have played my part."
Kate Nicholls, chief executive of UK Hospitality, said: "Fantastic hospitality experiences don’t happen without a huge effort from our teams, both front and back of house, and tips are a generous way of customers showing their gratitude, while providing a welcome boost to employees’ earnings. Tips are just one part of what makes working in hospitality a great job and career.
"We’re pleased to support this new piece of legislation as it comes into law today and look forward to working with government and other stakeholders on a code of practice that ensures a fair distribution of gratuities amongst all who contribute to providing great hospitality."
