Tipping Rules - Now Law

 We have previously tracked the progress of the Employment (Allocation of Tips) Bill through its Parliamentary trials.

The Bill was given Royal assent on 2^nd May 2023 and is now the Employment (Allocation of Tips) Act 2023.

The law won’t come into effect until 2024 as the Government must draft a Code of Practice that must then be consulted on; this is expected later this year. 

The key features of the legislation will be:

• Employers will be under a duty to allocate 100% of qualifying tips, gratuities, and service charges to their staff within 2 months of the tip from the customer.
• Employees will be able to see their employer’s tipping record and have the right to bring a claim in the Employment Tribunal in the event of a dispute, which can award a compensatory order of up to £5,000.
• Tips must be allocated fairly between all workers at the place of business.
• Employers will be prohibited from making deductions from tips including for credit card fees, bank charges, payroll or other administration costs. These costs must now be covered by the business.
• Agency staff are to be given new rights and must be awarded tips and service charge on the same basis as directly employed staff.

Where qualifying tips, gratuities and service charges are paid on more than an occasional and exceptional basis, the employer must have a written policy on dealing with qualifying tips, gratuities and service charges for the place of business.

The written policy must include the information on whether the employer requires or encourages customers to pay tips, gratuities and service charges at the place of business and how the employer ensures that all qualifying tips, gratuities and service charges paid are dealt with in accordance with this the new Law, including how the employer allocates qualifying tips, gratuities and service charges between workers at the place of business.