Tag: cashless society

All tips to go to staff under UK government plans to enhance rights of 2 million workers

Government unveils plans to overhaul tipping practices, helping around 2 million people top up their income

  • UK Government to tackle shameful tipping practices and ensure all tips go to workers
  • plans will help around 2 million UK workers retain their tips, which can make up a large proportion of income for many hospitality workers
  • customers will know tips are going to the worker for a fair day’s work

All tips will go to staff under new plans to overhaul tipping practices set out by the UK Government today (Friday 24 September), providing a financial boost to hospitality workers across the country.

Most hospitality workers – many of whom are earning the National Minimum Wage or National Living Wage – rely on tipping to top up their income. But research shows that many businesses that add a discretionary service charge onto customer’s bills are keeping part or all of these service charges, instead of passing them onto staff.

The government will make it illegal for employers to withhold tips from workers. The move is set to help around 2 million people working in one of the 190,000 businesses across the hospitality, leisure and services sectors, where tipping is common place and can make up a large part of their income.

This will ensure customers know tips are going in full to workers and not businesses, ensuring workers receive a fair day’s pay for a fair day’s work.

Tipping legislation will build on a range of government measures to protect and enhance workers’ rights. In the past 18 months alone, the government has introduced parental bereavement leave, protected new parents on furlough, and given millions a pay rise through a higher minimum wage.

Labour Markets Minister Paul Scully said: “Unfortunately, some companies choose to withhold cash from hardworking staff who have been tipped by customers as a reward for good service.

“Our plans will make this illegal and ensure tips will go to those who worked for it. This will provide a boost to workers in pubs, cafes and restaurants across the country, while reassuring customers their money is going to those who deserve it.”

Moves towards a cashless society have accelerated dodgy tipping practices, as an increase in card payments has made it easier for businesses to keep the funds.

80% of all UK tipping now happens by card, rather than cash going straight into the pockets of staff. Businesses who receive tips by card currently have the choice of whether to keep it or pass it on to workers.

Today’s plans will create consistency for those being tipped by cash or card, while ensuring that businesses who already pass on tips fairly aren’t penalised.

The legislation will include:

  • a requirement for all employers to pass on tips to workers without any deductions
  • a Statutory Code of Practice setting out how tips should be distributed to ensure fairness and transparency
  • new rights for workers to make a request for information relating to an employer’s tipping record, enabling them to bring forward a credible claim to an employment tribunal

Under the changes, if an employer breaks the rules they can be taken to an Employment Tribunal, where employees can be forced to compensate workers, often in addition to fines.

Tipping legislation will form part of a package of measures which will provide further protections around workers’ rights.

Building on economic support measures, the UK Government recently announced a range of initiatives to support the hospitality sector through its first ever Hospitality Strategy.

This set out ways to help the sector improve its resilience, including by making hospitality a career option of choice, boosting creativity, and developing a greener sector.

Cashless is killing tips

Over a third of Brits won’t tip via card due to lack of confidence it goes to the right person

A recent report from UK Finance has revealed the UK is another step closer towards becoming a cashless society as the number of payments made using notes and coins last year declined by more than a third.  

As more businesses decide to go cashless, this new move towards a fast-tracked cashless society is having devasting effects on the nations tipping habits, according to a new report. 

The 2021 Tipping Index commissioned by card payment specialist takepayments Limited, surveyed over 2,000 consumers to compare how tipping attitudes and behaviours have changed through the pandemic. 

The findings reveal that pre-pandemic, cash was the most favoured payment method for tipping (91%) as almost two thirds (64%) of those that tip this way said they felt more confident the tip would go directly to the person who served them. 

However as more businesses are no longer accepting cash, the research reveals less Brits are opting to carry cash as almost one in five (18%) said they no longer carry cash which they would usually leave as a tip. 

This new cashless movement is impacting tipping habits as one in four (23%) said they would only leave a tip if they had spare cash on them and one in four (24%) said they would specifically bring cash especially to tip.

Coronavirus and hygiene fears play a part in people tipping less too, as almost one in six (14%) said they are now less likely to leave cash as a tip due to hygiene or health reasons.

While almost three in ten Brits recognise tips are a big part of peoples income, more than a quarter (27%) state that while places no longer accept cash and only accept card payments, tipping isn’t always possible as Brits lack confidence that tips made by card payments go directly to the person who served them (35%). 

And for those Brits that do feel confident tipping on card, more than a third (35%) admit they leave a bigger tip when paying cash. 

Sandra Rowley at takepayments Limited said:  “While the sectors which commonly involve tipping can finally re-open, the professions who rely on tips to top up their income are unfortunately continuing to struggle due to the nation’s lack of knowledge around tips and card payments. 

“There is a misconception around card payments and tipping which needs to be highlighted as businesses are able to separate tips from the cost of services when taking card payments.

“The government is set to announce a new proposal for a Tipping Bill next month which will hopefully give the public more knowledge around workers rights and tips, as well as instil confidence around tipping on card.” 

The full findings of the takepayments 2021 Tipping Point Report are available to view here. 

Cashing Out: urgent action needed to protect payment lifeline

Vulnerable people risk being left with no way to pay for essential products and services as the coronavirus crisis further accelerates the UK’s shift to a cashless society, new Which? research reveals. The consumer organisation is calling for government action to ensure that the cash system does not collapse at a time when millions of people still rely on it. 

A survey by the consumer champion found that half (51%) of those looking after the finances or grocery shopping of someone else had been paid in cash in return for doing shopping, highlighting its continued importance in communities across the country and the huge challenge that a cashless society presents for those who are not yet ready or able to make digital payments.

As consumers are also experiencing difficulties paying with as well as taking out cash, Which? is pressing for action from the government and financial regulators to ensure millions of people aren’t left abandoned as a result of the outbreak that’s put additional pressure on the UK’s already fragile cash network.

The Which? study of more than 2,000 people, conducted at the start of May, reveals that nearly one in five reported that they were managing finances or ordering food and essentials for someone outside of their immediate household.

Of those, 32 per cent had bought food from a shop for others and been paid for it in cash, and 29 per cent had ordered for someone online and been paid for it with cash – while some responded that they had done both.

Which? has heard of numerous cases where cash is essential for this sort of help, including one person who is reimbursed in cash for delivering supplies to their vulnerable 91-year-old uncle, and another who shops for neighbours twice a week – after cash and a shopping list have been posted through their door.

The research also highlighted that one in 10 people were refused by shops when trying to pay for items with cash, at a time when only those that were permitted to sell essential goods were open. A quarter of those were left unable to purchase the item in question on at least one occasion as they had no alternative means of payment.

And while nearly one in three people reported still using cash to make some or all of their payments, seven per cent said they had found it more difficult to take out cash since the outbreak began.

With many retailers now encouraging non-cash payments and banks reducing branch opening hours, Which? supports schemes introduced by banks and businesses to provide access or alternatives to cash during this crisis.

However, it remains unclear how effective these have been at addressing the root of the problem. It believes these are unlikely to be a viable long-term fix, and that cash-dependent consumers could be left completely excluded from engaging with the economy if cash is not urgently protected.

Despite the clear need for cash, the coronavirus pandemic has pushed the cash system that millions of people still rely on into deeper peril, just months after the government vowed to protect it.

In March, the government committed to legislating to protect access to cash for as long as people need it, after warnings that the system could collapse within two years. This followed investigations from Which? that found the UK had lost a staggering 10,500 free-to-use cash machines since 2017, and over a third of bank branches in less than five years.

However, the coronavirus pandemic has drastically reduced the timeframe for intervention, and the government’s pledge risks becoming obsolete if current trends continue to go unchallenged, which risks cutting off millions of people from the main form of payment they rely on to purchase essential products and services.

Coronavirus has rapidly accelerated the decline in cash use. Latest figures from Notemachine, one of the UK’s largest ATM operators, show that cash withdrawals have reduced by 45 per cent since lockdown began – although the average value withdrawn has increased by 13 per cent.

And while figures from Link, which manages the UK’s largest cashpoint network, show that approximately £1 billion is still being withdrawn from ATMs every week, it says the overall decline means that the current level of cash usage is now at a level that was not expected for five years.

As well as urgently introducing the legislation it committed to in the budget, Which? is calling on the government to take all necessary steps to ensure people can continue to use cash to pay for essential goods and services during the coronavirus pandemic.

This includes providing support for businesses to accept cash and offering clear guidance on how to handle banknotes and coins safely.

It also believes the FCA must collect and publish information about emergency measures that individual banks have put in place, including an assessment of their long-term suitability and effectiveness.

Which?’s proposals have been backed by a diverse group of organisations that all share its concerns about the implications of the rapid decline of cash availability and acceptance. These include the Access to Cash Review – led by Natalie Ceeney, Age UK, the RSA, Independent Age, Alzheimer’s Society and Link.

Gareth Shaw, Head of Money at Which?, said: “The coronavirus outbreak has shown that cash remains vital to many consumers, particularly for vulnerable people who rely on it to pay for essential supplies. 

“As a result, it’s vital that the already fragile cash system is not left to collapse completely as the UK’s shift to a cashless society accelerates.

“The government must urgently press ahead with the legislation it has already committed to before it becomes obsolete, as failure to do so risks excluding millions of people from engaging in the economy.”

A Digital Economy? Not Cashless, But Less Cash

Big Tech must open up data and help fund digital inclusion as UK economy moves away from cash in 2020s, says IPPR

  • New competition powers should compel big digital firms to share their data if they enter personal finance market – to prevent market domination and promote innovation
  • As UK heads to a ‘less cash, but not cashless’ digital economy, UK must step up investment in digital skills and connectivity to meet new inclusion targets

In a comprehensive review of the future of UK payments, the think tank IPPR has set out how the transition to a ‘less cash’, but not cashless, digital economy can be managed to protect the vulnerable and spread digital opportunities widely and fairly.

The digital transition is already happening fast. While in 2008 60 per cent of UK consumer payments were made in cash, this had fallen to just 28 per cent in 2018. The IPPR report cites forecasts that by 2028 fewer than one in 10 payments will be made in cash.

The digital revolution in finance means a shift to a considerably less cash-based digital economy, but the prospect of a fully cashless UK is not on the horizon, argues IPPR. This shift is expected to boost UK productivity and create opportunities for business and consumers, but there is a significant risk that people and areas reliant on cash may be excluded.

Giant tech firms such as Facebook and Amazon are already starting to offer more personal financial services, alongside traditional banks, but the control they could have over huge amounts of people’s data poses significant risks.

The IPPR report argues that as cash use continues to fall and digital payments break new ground, it is critical that policymakers take action to shape the future of UK payments.

To deliver a future that is both more digital and more just, IPPR recommends:

  • Major platforms such as Facebook and Amazon should be required to open up their data upon entry into the personal finance market. New powers should enable the Competition and Markets Authority (CMA) to impose conditions on market entry for major platforms, including requirement to comply with Open Banking principles and open-source technology. These should include an option to block market entry, including for major technology platforms, where it could lead to consumer detriment, slowing in innovation rates, or excessive market power.
  • Democratising data – Anonymised personal banking and financial service data should be held in a new public data trust, ‘Digital Britain’. This will strengthen competition, promote innovation and prevent monopolistic tech giants dominating the market.
  • Digital Transition Levy worth billions of pounds a year – Reforming the Banking Levy on banks and financial service providers to fund the delivery of digital inclusion schemes against new digital inclusion targets – boosting internet connectivity, strengthening digital skills and fostering innovation that will help people overcome the barriers to the digital economy. The new levy combined with new targets would mean that those who stand to gain most from the digital transition will have some of their gains reinvested in communities that risk being left behind.
  • Bridging the digital divide – More than 8 million UK adults still rely on cash and one in five people do not yet have the digital skills they need to access the digital economy. New targets and investment should be put in place to protect cash access for those who rely on it and to narrow the digital divide across the UK.
  • Protecting long-term access to cash – Between 2017 and 2018 6,243 cash machines have been closed – a 9 per cent drop in a single year. While there are still more UK ATMs in operation than at any point before 2006, this recent rate of decline is a cause for concern. To stem the decline of free-to-use ATMs, business rate rebates should be offered to operators who provide them, and retailers should be incentivised to roll out free cashback services.
  • Creating a new Post Bank – Between January 2015 and August 2019, 3,312 bank and building society branches closed in the UK, equivalent to 55 closures a month. The UK Treasury should oversee the creation of a publicly owned Post Bank with a public service mandate to provide basic banking services to all citizens. It would operate via the existing Post Office network and help ensure the future viability of the Post Office.
  • Championing digital self-employment – The government should develop a digital platform for self-employed workers, so they can better manage payments, streamline tax accounting and apply social security provision. This will not only save them time and boost tax revenues, but also help tackle fraud and financial crime by bringing the informal economy into the system.

IPPR argues that these proposals, amongst others in the report, will deliver a path to a digital economy that delivers not just greater prosperity, but greater economic justice: where more people can access better payments and banking services, data is harnessed for the public good and the most vulnerable people are protected.

The report notes that an increasingly digital economy brings faster payments, more personalised services and greater convenience for digital users. However, if these benefits are only available to digitally savvy people – typically younger people and those with higher incomes – inequality could be embedded into the future of finance, it warns.

IPPR urges the government to seize this moment to prevent all the gains from digitisation flowing to big tech firms and big finance and instead deliver excellent financial services for all, a competitive innovative personal finance market and democratic control of data.

Rachel Statham, IPPR Economic Analyst and lead report author, said: “The future will have less cash. But urgent action is needed to set the UK on course towards an economy that is both more digital and more just.

“By getting ahead now, we can invest the billions needed to get every part of the country ready for a more digital future and protect access to cash where people rely on it. This could see the potential benefits brought by a move away from cash invested to narrow rather than widen inequalities, handing control over from Big Tech and banks to people and communities.

“The move away from cash should only happen as fast as people are ready for, and the benefits of doing so should be shared. By setting new digital inclusion targets at the national, regional and local level, and investing to meet these targets, we can make sure bridge the digital divide and protect cash for those rely on it.”

Carys Roberts, head of the Centre for Economic Justice and IPPR Chief Economist, said: “There are opportunities within reach as the UK economy shifts away from cash and towards digital payments – from productivity increases to preventing fraud and financial crime.

“But there’s also a danger that the shift to digital, if not proactively shaped, will work for some and leave many behind. The government should enable everyone to take part in the digital economy and ensure powerful companies like Apple and Google play their full part in shaping a fairer move away from cash in the UK.”

Jenny Ross, Which? Money Editor, said: “While digital payments have brought great benefit to countless consumers, it is crucial that a balance is found that also protects cash for all those reliant on it – instead of stripping people of this vital payment method.

“With the cash landscape on the verge of collapse, it’s clear that industry alone cannot be relied upon to guarantee withdrawals – so the government and payments regulator must quickly step in with a plan to protect cash against the sweeping tide of bank branch and cashpoint closures.

“Ultimately, the government should legislate to give consumers confidence that they can access cash for as long as it is needed.”