Are you ready for the new Allocation of Tips Act?

The Employment (Allocation of Tips) Act 2023 comes into force on 1 July 2024 and employers will need to ensure that they are prepared. This new law makes a number of changes to the current laws around tipping and the financial consequences for non-compliance will hurt employers, with awards of up to £5,000 per employee possible. 

This new legislation protects all workers, including zero-hours contract workers, and there is no transition period. Any written policies required will need to be in place by the end of June 2024, likewise tipping records, as employees are able to request to see a copy once every three months. 

The written policy should include how tips are accepted, how tips are allocated and distributed, and what steps the employer takes to ensure tips are handled fairly and transparently in accordance with the Tipping Act.

The government held a consultation and published a Draft code of practice on fair and transparent distribution of tips. The consultation closed in February 2024.

Employers are required to:

a. pass on all tips and service charges to workers without deductions, except in very limited scenarios, such as deduction of income tax

b. ensure that tips are distributed in a fair and transparent manner when the employer takes control, or exerts significant influence, over their distribution

c. have regard to this code of practice on fairness and transparency of tip distribution when they are distributing or influencing the distribution of tips

d. maintain a written policy on how tips are dealt with at their place of business, and ensure this policy is made available to all their workers

e. maintain a record of all tips paid at their place of business and their allocation and distribution between each worker, to which workers have the right to request access.

Posted on 04/03/2024 by Ortolan

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