The government’s much talked about Tipping Act will finally come into force in October, following a three-month delay to give businesses more time to prepare
Originally scheduled for July this year, a new tipping law that will see millions of UK workers take home an estimated £200 million more of their hard-earned cash, will come into force in October, the government has announced.
Publishing its Code of Practice on the fair and transparent distribution of tips, it will soon be unlawful under the Employment (Allocation of Tips) Act 2023 for businesses to hold back tips, gratuities and service charges from their employees, ensuring staff receive all of the tips they have earned.
The measures, which will apply to England, Scotland and Wales, are expected to come into force on 1st October 2024 once parliamentary approval has been sought, however, the government is encouraging all businesses to follow the new requirements immediately.
The Tipping Act stipulates that employers are now required to:
1. Pass on all tips and service charges to workers without deductions, except in very limited scenarios, such as deduction of income tax.
2. Ensure that tips are distributed in a fair and transparent manner when the employer takes control, or exerts significant influence, over their distribution
3. Have regard to this code of practice on fairness and transparency of tip distribution when they are distributing or influencing the distribution of tips
4. Maintain a written policy on how tips are dealt with at their place of business, and ensure this policy is made available to all their workers
5. Maintain a record of all tips paid at their place of business and their allocation and distribution between each worker, to which workers have the right to request access.
Businesses are encouraged to review the code of practice so that they understand the rules and requirements and then set up a system of distributing tips that best suit them. A few of the key takeaways include:
– The Tipping Act applies to all workers, apart from the self-employed. Allocating and distributing tips does not necessarily require employers to receive the same proportion of tips to all workers, however, they should be allocated fairly without discrimination.
– Employers must ensure that all tips are distributed to staff, at the latest, by the end of the month following the month in which the tips are paid by customers. For example, if a customer leaves a tip on 23rd June, it must be distributed by 31st July at the latest.
– Employers should consult with workers to seek broad agreement in the workplace that the system of allocation of tips is fair, reasonable and clear, and the factors considered by employers must be stated in the tipping policy shared with workers.
– An employer’s approach to allocating tips should be reviewed on a regular basis in line with staff turnover and any wider changes to the organisation.
– Tips cannot count towards minimum wage pay – this has been the case since 2009.
The Code of Practice can be found at: https://www.gov.uk/government/consultations/distributing-tips-fairly-draft-statutory-code-of-practice
