Last reviewed 20 July 2022

You may recall that the Queen’s speech contained a few surprises for organisations, the biggest being the absence of the Employment Bill. This caused many within the HR and employment law community to question when, if ever, certain rights would come into force. Now, however, through the more unusual route of a “Private Members Bill” in parliament, at least two of those rights look set to go ahead: neonatal leave and protection for hospitality workers tips.

Below we examine the background of these rights and set out a possible timeline for their introduction, based on what we know from the Government.

Neonatal leave

Stuart C McDonald MP put before parliament a Bill designed to provide leave and pay for parents with neonatal babies on 15 June 2022. This began the long process through which a proposed bill becomes law. Now, however, the “Neonatal Care (Leave and Pay) Bill” has been debated in parliament and backed by the Government and has moved forward on its passage to become law.

Should it become law, this will allow parents to take up to 12 weeks of paid leave, in addition to other leave entitlements, such as maternity and paternity leave, to allow them to spend more time with their baby who has been admitted into hospital (up to 28 days after birth), and who needs a continuous stay in hospital of seven full days or more.

This right will apply from the first day of employment and will be paid to parents who meet certain conditions regarding continuity of service and minimum earnings. It’s expected this will follow the same tests already used for other family-friendly statutory pay, such as for maternity or paternity (ie a minimum of 26 weeks’ continuous service and earnings above £123 per week).

At present, there are no statutory rights that match this new proposed entitlement. When it eventually becomes law, it will be a significant change to parents’ rights and employers’ obligations. According to the Bill’s explanatory notes, we are not likely to see this right introduced until 2024 or 2025. This is because HM Revenue & Customs and commercial payroll generally need around 18 months’ notice for changes that involve the administration of statutory payments. The 18-month period would be triggered when the Bill becomes law, which may not be until 2023, so employers will have plenty of notice to introduce necessary policies around this right.

Staff tips set to be protected in law

In September 2021, the Government announced plans to introduce a law that would make it unlawful for employers to withhold tips from hospitality workers. This is an idea that has been discussed a number of times within government (it was first put forward as a proposed change in 2016!).

Now, however, another Private Members Bill has been put forward and backed by the Government. The newest incarnation of this right is found in the Employment (Allocation of Tips) Bill, put before parliament by Dean Russell MP on 15 June 2022 and debated and passed through to the next on 15 July.

The legislation proposes to give enhanced protections to staff members by entitling them to keep 100% of the tips they earn. This includes service charges added to card payments and cash tips given directly to workers. It will do this via a new statutory Code of Practice which will give businesses and staff advice on the distribution of tips. Workers will also be given a new right to request more information relating to their employer’s tipping record, enabling them to bring forward a credible claim to an employment tribunal.

Currently, it is legally permissible for employers to take a percentage cut of the tips given to their workers, with some organisations choosing to keep up to 100% if they wish. There is no timeframe for when the Bill will be passed into law, but it’s unlikely to happen for several months at the earliest and probably longer. However, employers currently keeping some or all of their staff tips may want to consider the negative impact this can have and change their practices before they are legally required to do so.

Distributing tips fairly

Where staff are working hard to earn tips, many will be discouraged when they don’t see a return on their efforts. Withholding tips can contribute to reduced motivation and engagement, higher turnover rates and poor overall performance, leading to further expenditure from organisations who have to pay out on training and recruitment costs more frequently.

By proactively implementing policies and procedures to ensure the fair distribution of workers’ tips, businesses can benefit from improved retention and productivity, with employees driven to achieve communal goals.

In doing so, employers will have to identify how to fairly distribute tips amongst their teams; they may also need to work with their payroll providers to ensure tips are reflected in employees’ take-home pay. This could pose some logistical issues. Some employers might choose to give an equal allocation to all employees regardless of their role in the organisation. However, others might prefer to only give staff tips that they were directly involved in earning, eg the service charge or total cash tip on the particular table they were serving.

Whilst it is expected this will have a positive impact, since employees are receiving the full reward for their hard work, issues may arise over staff not believing that tips are being shared fairly. As such, it’s beneficial for employers to have a clear plan in place, which can be communicated to their teams, to minimise any resistance or grievances. The new Statutory Code of Practice, when released, will provide information to help businesses better understand how to do this, to ensure fairness and transparency.