Tips, gratuities, cover and service charges: proposals for further action - Consultation

The Government chose Bank Holiday Monday to launch a short consultation on the next steps on possible reform to the way tips and the like are dealt with, with the aim of ensuring that the treatment of tips, gratuities, cover and service charges is ‘fair and transparent’.

The Government believes that all discretionary payments for service should be subject to 3 broad policy objectives. They should be:

• Discretionary – clear to consumers that they are voluntary;
• Received by workers; and
• Clear and transparent to consumers and workers in terms of how the payments are treated.

The Government believes that action is necessary to ensure any future discretionary payments for service meet these policy objectives. The consultation sets out the following options for change to achieve those objectives:

• Ensure transparency to consumers that discretionary payment for service is just that – ‘discretionary’:
• Option 1A: The consultation asks for views on ways to ensure businesses make clear discretionary payments for service are just that - voluntary for the consumer;
• Option 1B: The consultation asks whether businesses should not be allowed to suggest a particular amount level of discretionary payment for service;
• Option 1C: The consultation considers the need for increased transparency regarding cover charges;

• Ensure workers receive a fair share from discretionary payments for service. –
  • Options 2A, 2B and 2C: The consultation proposes options to prevent or limit the practice of additional charges on staff related to sales levels; and  
  • Option 2D: The consultation asks how well-managed tronc schemes can be encouraged which allocate tips across workers in a way which is agreed upon by the staff.
• Increase transparency for consumers and workers regarding the treatment of discretionary payments for service. The consultation proposes options to:
  • Option 3A: Update the current voluntary Code of Practice; and to
  • Option 3B: Placing the voluntary Code of Practice on a statutory basis.

The Government says that it will publish an Impact Assessment for these proposals during the consultation period.

The closing date for this consultation is 27 June 2016.

The full consultation document can be found here: 'Government consultation on tipping, gratuities, cover and service charges'