The Employment (Allocations of Tips) Act 2023 received Royal Assent on 2 May 2023 and is expected to come into force in 2024 (the exact date is yet to be confirmed).
Currently in the UK, there is no legal obligation on employers to pass on tips to their workers. The Employment (Allocations of Tips) Act 2023 aims to ensure that 100% of tips, gratuities and service charges paid by customers are allocated to workers. According to the Government press release, more than 2 million workers (mainly from the hospitality sector) will benefit as result of the new legislation which will make it unlawful for employers to retain all or part of tips that have been paid.
A new Statutory Code of Practice will now be developed to provide businesses with advice on how tips should be fairly distributed. The aim of the Statutory Code of Practice will be to improve fairness and transparency for customers and workers. Workers will also have the right to request information about an employer’s tipping record and this will need to be provided by the employer within four weeks. Employers are required to keep a written record of how tips have been dealt with over a three-year period.
What should employers do?
Employers should review their current policies and practices on tipping over the next few months to ensure they are compliant (including with the upcoming Statutory Code of Practice) when the new legislation comes into force. They will be required to have a written policy on how allocation of tips will be distributed. A breach of the rules will allow workers to bring an Employment Tribunal claim which could result in the employer having to pay compensation and/or adjust the allocation to the worker.
How we can help
If you have any queries around the incoming legislation and what steps will be required, please get in touch with our employment team.
