New legislation around tips in restaurants will come into force across the UK on Tuesday (October 1).

Under these new rules, restaurants will be banned from withholding tips from staff, according to Sky News.

The change will apply to the entire hospitality industry as well as any other businesses that allow tips. 

"It means more than two million workers will be able to keep hold of an estimated £200m a year that is paid by customers in tips, gratuities and service charges," Sky News reported.

What does the new tipping law say?

"Employers must pass on tips to workers without any deductions and a draft statutory code of practice sets out how tips should be distributed to demonstrate fairness and transparency," the news outlet continues.

"Employers should have a written policy on tips and record how they manage them.

"Workers will have rights to request information about an employer's tipping record – this will allow them to bring credible claims to an Employment Tribunal.

"Employers also can't alter someone's salary or hourly rate - and tips don't count towards the minimum wage. 

"Tips must also now be paid within one month."

Cash tips were already protected, however these new laws will now cover tips given via card payments.

The new law was initially set to come into effect from July 2024, but was delayed, according to Sky News.

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Fears new tipping rules could see increased prices at restaurants

However, there are some fears these new tipping rules will see restaurants increase their prices, as they will no longer able to rely on tips to use for staff wages. 

Saxon Moseley, head of leisure and hospitality at consultancy RSM, speaking to The Guardian said: "Those that have been using the service charge to pay staff or to partly offset their wage bill are still going to have to pay their staff, but now won't be able to draw on this cash fund.

"And in that scenario, margins will be hit, in some cases fairly drastically."