A report published yesterday by Business Secretary Sajid Javid detailed that unfair tipping practices must end. Read more here.
Unite hailed the review but warned that it will need the support of law to ensure employers respect the changes.
Kate Nicholls, chief executive of The Association of Licensed Multiple Retailers (ALMR), also responded to the government review, noting the rise in cashless transactions.
She stated: “With the rise of cashless transactions, customers are increasingly rewarding good service through credit card payments.
“These have to be processed through the company payroll in order to ensure that tax is properly accounted for and paid – this is not the case with cash tips where the individual has to declare the tax and it is this which has led to some confusion and we welcome measures to increase transparency.
“It means that there will be a deduction, but it means that the tips everyone receives a fair share, including the tax man.
“No company should be profiting from tips and service charges, but equally no company – particularly small businesses – should be penalised for collecting and processing tax on behalf of the government.”
Managing director of the Sustainable Restaurant, Mark Linehan, said: “Restaurant customers crave and deserve transparency. Service charges are optional and discretionary and so a continued failure to match these expectations by communicating clearly, will be bad for business as, ultimately, diners will refuse to pay them.”
British Hospitality Association CEO Ufi Ibrahim, said: "Transparency is precisely what we asked the government to consider. Customers should be able to reward good service and know where their money ends up and how much of it goes to the staff.
“Over the coming few weeks, we will convene a series of meetings with hospitality business leaders across the UK and conduct our own impact assessment, to deliver a unified and robust response to inform the government’s decision making process”.