Research by the trade body showed sector businesses that add a discretionary service charge onto customer’s bills are keeping part or all of these payments rather than passing them on to staff.
The NTIA said the move from Government would make it illegal for employers to withhold tips from workers and this would help about two million people working in the circa 190,000 businesses across the hospitality, leisure and services sectors, where “tipping is commonplace and can make up a large part of their income”.
NTIA chief executive Michael Kill said: “The move by Government to make it illegal for businesses to withhold tips has been welcomed, and will help more than two million hospitality workers who are on minimum wage."
He continued: “This will also give confidence to customers that, when tipping for great service, the member of staff receives the gratuity.
“This will also bring into line businesses that currently withhold tips and start to build back some confidence in the workforce with a greater ability to earn.”
The five-year delay of the tips legislation has cost waiting staff in the hospitality sector £2,000 a year, estimated union Unite.
Ability to create jobs
Last week, UKHospitality chief executive Kate Nichols also hailed the announcement. She said: “UKHospitality supports the right of employees to receive the deserved tips that they work incredibly hard for.
“The hospitality sector, as it begins to rebuild after 18 months of restrictions and enforced enclosure, is already creating new jobs and driving the jobs recovery.
“Ensuring employees receive the tips they earn will further strengthen the sector’s ability to create jobs and support the wider economic recovery.
“For hospitality businesses, though, customers tipping with a card incurs bank charges for the business, and many also employ external partners to ensure tips are fairly distributed among staff.
“With restaurants, pubs and other venues struggling to get back on their feet, facing mounting costs and accrued debts, we urge the Government to continue to work closely with the sector as it introduces this legislation to ensure this works for businesses and employees.”