Tom Belger column: ‘Union revolt as U-turn revealed on workers’ tips’

Will all waiters, baristas, bar and kitchen staff ever get a fair share of their tips?

Unite and other unions have been campaigning for decades to stop firms siphoning off money that customers leave for workers.

This government began righting that wrong last October, completing legislation the Tories had been promising and dithering over since 2015.

But it has always planned to go further. Labour pledged just before the election to let “workers decide how tips are allocated”, through its wider flagship employment rights package. Consultation is apparently imminent.

Another employment rights reform U-turn

The catch? The government has now quietly decided workers can’t be trusted to decide how tips are allocated.

Most U-turns take some pressure for governments to admit, but I stumbled on this reversal hiding in plain sight in the recesses of the government’s website. The ‘Common Questions’ section of a factsheet on the policy begins: “Why are you not handing full control of tip allocation to workers, as you pledged?”

READ MORE: ‘Working people need secure jobs – we must give all workers a Guaranteed Hours Contract’

It says that reforms will still force employers to hold “genuine consultation” with workers – something it rightly calls a “significant step forward”.

But it reveals the government has rowed back because direct worker control “could risk certain groups of workers being disadvantaged by a ‘tyranny of the majority’”.

Sharon Graham: Language ‘wrong-headed and offensive’

It’s an uncomfortable message from the democratic party of labour, not least one governing on a third of the popular vote. When I flagged it to Unite, general secretary Sharon Graham was typically damning, calling it “wrong-headed and offensive”.

I understand other unions weren’t happy about the news at a meeting of affiliated unions last week, either, and it’s been raised with the government who did not respond to requests for comment.

Graham said the factsheet should be withdrawn and redrafted. “Using language such as ‘the tyranny of majority’ of workers totally fails to appreciate the employment conditions of hospitality workers.”

JOIN LABOURLIST ‘IN CONVERSATION’ WITH STEVE ROTHERAM ON 3rd FEB

The Institute of Employment Rights agreed the framing was “concerning”. Director James Harrison noted majority decisions are how collective bargaining works. 

The government also argues direct worker control risks “indirect discrimination against workers with protected characteristics”. But Graham argues the risk of discrimination and unfairness comes instead from the employer side, if policies don’t properly reflect workers’ voice.

Official documents argue the “guardrails” of obligatory consultation, guidance and “robust enforcement” via tribunals can prevent such problems.

Harrison fears consultation could be a “mere formality”, however. He’s rightly doubtful many employers will be cowed by the threat of tribunals. How many zero-hour workers can and would risk job loss, a poor reference and have large enough savings or willingness to take on debt to fund a tribunal case, which may not be heard for years – or even pay out if they win?

Why some employers can’t be trusted

The government wouldn’t be mandating consultation at all if it didn’t suspect too many employers aren’t giving all workers their fair share.

Unite warned recently of loopholes even in last year’s law. Despite the 2024 ban on employers raiding service charges, the union found continued evidence of “employer skimming” through other fees. Some outlets have allegedly replaced service charges with similar-sounding admin charges, which they trouser entirely. Other restaurants have come under fire over alleged “brand fees” in the double digits, and smaller cover charges.

There have been complaints too of inadequate transparency over how tips are split, and low-paid workers waiting weeks to get them. The government doesn’t help by making firms pay VAT and national insurance on any mandatory service charges.

Subscribe here to our daily newsletter roundup of Labour news, analysis and comment– and follow us on Bluesky, WhatsApp, X and Facebook.

Unite argues Labour should ban all deductions, mandate worker-elected committees for allocating tips, and levy new fines. 

 The little-known loophole in New Labour’s best-known policy

It’s galling politically to see yet another policy not thrashed out enough upfront to survive contact with reality – and yet another bold, progressive measure overshadowed by partial retreat and pitfalls.

But it’s more galling morally to see Labour let hospitality workers down for a third time in three decades. 

This is only the latest chapter in a long saga of loophole shenanigans I was surprised to discover a few years ago.

The minimum wage may be one of New Labour’s best-known achievements, but the 1999 legislation also contained one of its least-known sellouts.

The government caved into lobbying to let restaurant, cafe and bar owners cover minimum wage costs by raiding as much of their service charge pots as they wished. This lets  unscrupulous firms pocket all the cash – saving by topping up wages to the legal level. One in five firms reportedly did so. The minister involved later admitted his regret.

Labour eventually made amends, but only a decade later, and only after union and newspaper exposés on high-street chains – quietly and predictably doing what ministers had let them.

 Years more of loopholes, scandals and delay

The 2009 fix nominally let workers keep their tips. But depressingly it contained a second loophole let-down – firms could still deduct admin fees. 

Ministers hoped more transparency by employers would keep them honest, but reportedly backtracked too on mandating transparent policies. A voluntary code followed, and then so did the Tories, who slashed promotion budgets.

Multiple high-street chains levied admin fees up to 10%, quietly and predictably once more. It took another half-decade for another outcry, forcing the Tories to promise an “immediate investigation” and a clampdown.

That was in 2015. Some 461 weeks later when they left office, the law still hadn’t changed.

The fairness dilemma – how to split tips

Even Tory ministers acknowledged that those who leave tips “rightly expect it to go to staff in full”.

The 2024 law mandates “fair” policies. What’s less clear is what “fair” means for the split among workers themselves. Many will share Unite’s belief in democratic, workplace-specific decision-making. But others may share the government’s worry about discrimination among workforces, or might argue for enshrining one simple policy in law – like equal pay for every hour worked. 

Some might say front-of-house staff deserve all tips intended for them. Others might want to mandate all back-of-house staff (or waiters on quieter shifts) get their cut, too.

Meanwhile the government argues direct worker control could be “impractical to enforce”, which is probably true. That’s a problem if you think policies should reflect particular ideas of fairness beyond democracy alone.

So ending this sorry saga isn’t easy. I’m hopeful every workforce will one day get their tips in full. I’m less hopeful every worker will ever feel they’re getting their fair share.

Share your thoughts. Contribute on this story or tell your own by writing to our Editor. The best letters every week will be published on the site. Find out how to get your letter published.

• • SHARE: If you have anything to share that we should be looking into or publishing about this story – or any other topic involving Labour– contact us (strictly anonymously if you wish) at [email protected].
  • SUBSCRIBE: Sign up to LabourList’s morning email here for the best briefing on everything Labour, every weekday morning.
  • DONATE: If you value our work, please chip in a few pounds a week and become one of our supporters, helping sustain and expand our coverage.
  • PARTNER: If you or your organisation might be interested in partnering with us on sponsored events or projects, email [email protected].
  • ADVERTISE: If your organisation would like to advertise or run sponsored pieces on LabourList‘s daily newsletter or website, contact our exclusive ad partners Total Politics at [email protected].