Businesses will have slightly longer than originally planned to prepare for the new Employment (Allocation of Tips) Act 2023. The changes – which are set to benefit more than 2 million UK workers across the hospitality, leisure and services sectors – were originally proposed to come into force on 1st July 2024, but will now come into force on 1st October 2024 instead.
The new laws will bring in the following changes:
- 100% of tips and service charges will need to be distributed to staff, with deductions only for taxes. This means that employers will no longer be able to use tips to cover the administrative costs associated with the allocation of tips, such as credit card charges.
- All tips will need to be paid to workers by the end of the following month after receipt from the customer.
- Tips must be distributed in a fair and transparent way, with regard to a new statutory Code of Practice (a draft of which can be found here).
- Businesses where tips are left more than occasionally must have a written tipping policy in place.
- Workers will have a new right to request a copy of their tipping record.
- Agency workers will have the same entitlement to tips as other workers.
Alex Payton comments: “These reforms have been on the horizon for quite some time. Businesses that receive tips from customers often should ensure that they are aware of the upcoming changes and prepared ahead of 1st October 2024. This will include reviewing or creating a written tipping policy which is in line with the new laws.”
If you have any questions about the upcoming changes to the allocation of tips, or would like assistance with reviewing or drafting a tipping policy, please contact a member of the team here.
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