After many delays, the Allocation of Tips Act will come into effect on October 1st 2024.
Also known as The Employment Act or The Tipping Bill, this legislation sees a change to the law where withholding tips from staff will now be unlawful.
Approved by Parliament under the previous UK government, this stands as an update to the Employment Act, which, as well as the Code of Practice of Tipping Act, remains a pillar in safeguarding workers.
See the Code of Practice on Fair and Transparent Distribution of Tips
What does the Allocation of Tips legislation enforce?
The Allocation of Tips Act legislates that tips, service charges and gratuities shall go to workers and not be retained by employers.
Employers must understand the law and do their due diligence when implementing tipping rules in their establishment. Failure to understand and follow the Code of Practice or the Allocation of Tips Act can result in workers submitting claims to employment tribunals, and therefore should be followed carefully.
The Code does not set out an exhaustive list of factors for employers to consider. Instead, it provides overarching principles on what fairness is for the purposes of the Tipping Act, the areas in which employers need to make decisions to comply with their duties, and how they should apply these principles in their specific places of business.
Tips are not determined by method of payment, and non-monetary tips can also qualify under the new Tipping Act.
What does the Allocation of Tips Act require of employers:
- Fair distribution of tips among employees
- Timely payment of tips, received by the end of the month
- Employers must have a written policy in place, to be shared with workers and staff.
- Employers must keep records of their tipping practices
- Employers must provide all information about how tips are distributed when requested by workers
Should Tips be allocated evenly to all workers?
The Allocation of Tips Acts enforces tips be distributed fairly. But fairly doesn’t mean evenly. There are legitimate reasons why employers allocated different amounts to separate workers.
A list of considerations include:
- Type of role
- Basic pay
- Hours worked during periods where tips are received
- Individual or team performances
- Seniority level
- Length of time employed under the employer
- The customer’s intention
Employers must be careful to avoid any form of unlawful discrimination. There are various methods by which tips can be allocated by an employer. Various tronc arrangements are permitted.
The New Tipping Law will come into place October 1st
2 million workers will now have their tips protected by law, and employer’s will have their tipping practices recorded. It is expected to alter the destination of £200 million per year; what would go to businesses, club, bars, pub, restaurants, will now go to staff.
Kate Nicholls, CEO of UKHospitality, said delaying the tipping law was appropriate. Employers should now be ready for the changes and have a tipping policy in place.