New regulations concerning the handling of tips will now be enforced starting 1 October 2024, instead of the initially anticipated date of 1 July. This change will impact a variety of employers, including those in the hospitality industry, hairdressing salons, and taxi services.
The Employment (Allocation of Tips) Act 2023, commonly referred to as the ‘Tipping Act,’ was enacted on 2 May 2023. From 1 October 2024, employers will be required to pass all tips directly to their employees. Additionally, any business where workers regularly receive tips must establish a tipping policy. Workers who believe they are not being treated fairly can request a written copy of their tipping records and may file a claim through the Employment Tribunal.
A significant aspect of the Tipping Act is the obligation for employers to comply with a new Code of Practice, which provides guidelines to ensure tips are distributed fairly and transparently.
The code applies to any tips, gratuities, or service charges that the employer controls. However, cash tips received directly by the worker, which they retain, fall outside the scope of the Tipping Act and the Code.
The Code of Practice
The new Code of Practice is designed to assist employers in implementing the Tipping Act’s requirements. According to the Act, employers must:
- Pass on all tips and service charges to employees without any deductions, except in specific circumstances like income tax deductions. Tips must be distributed no later than the end of the month following the month they were received.
- Ensure that tips are distributed fairly and transparently when the employer has control or significant influence over their distribution.
- Follow the Code of Practice on the fair and transparent distribution of tips when managing or influencing their allocation.
- Maintain a written policy on how tips are handled within their business and make this policy accessible to all employees.
- Keep a record of all tips received and how they have been allocated among workers. Employees will have the right to request access to this ‘tipping record.’