21st January 2025
The new tipping legislation under the Employment (Allocation of Tips) Act 2023 came into effect on 1st October 2024. This law saw a big change to the hospitality sector and means that employees now keep 100% of their tips, gratuities, and service charges without any deductions.
The new legislation aims to prioritise fairness and transparency for all employees who receive tips as part of their work. As a result, employers have needed to adjust their policies to accommodate the changes implemented by the Act.
“The Employment (Allocation of Tips) Act 2023 is an advancement for ensuring fair treatment of people in public facing roles. By mandating that workers retain 100% of their tips and requiring written tipping policies, the Act promotes transparency and trust within the workplace,” says Employment expert Sarah Everton, at Myers & Co. “This not only benefits employees by safeguarding their income but also aids employers in establishing clear and fair practices, ultimately leading to a more motivated and satisfied workforce.”
Below, Sarah explains the key details of this change and what this means for employment law.
The shift to awarding 100% of all tips to staff, without deductions or administrative fees, creates a more transparent culture which is achievable through creating a Code of Practice.
A Code of Practice requires employers to establish a written policy detailing acceptable practices regarding tips within their business. Alongside this, an accessible log of tips that all employees can access must be kept by employers to remain transparent and compliant with the changes.
This allows employers to better communicate with their team on the fair distribution of tips, which may help mitigate any potential disputes regarding how tips are awarded. A new Code allows both employers and employees to establish clearly how much will be paid, when and how.
Alongside a written tipping policy and log, there are significant elements to this policy employers should keep in mind:
By instating a written policy and allowing employees to access tipping records, they can file claims for withheld tips. Employers are required to keep records of tips for three years from when these were paid, and a typical payout of tips should be completed by the end of the following month from when they were received.
Employers who fail to comply with these requirements may face tribunal action or a fine. Penalty fines of up to £5,000 may be paid per case if an employer is non-compliant. This legislation makes it much easier for employees to claim unpaid or incorrectly distributed tips.
With these measures in place, the new tipping legislation aims to foster a more equitable environment for service workers across the UK and is one of many updates being made to employment law over the course of the next few years.
At Myers & Co, we can help implement changes in your business so you can be confident that you are complying with changing employment laws. For further information on how we can help you and your business, please contact Sarah Everton on 01782 491025 or email sarah.everton@myerssolicitors.co.uk.
