The Employment (Allocation of Tips) Act 2023, which amends the Employment Rights Act 1996, was previously scheduled to come fully into force on 1 July 2024, but this has now been delayed until 1 October. The Act requires employers to pass on all tips and service charges to workers without any deduction, except in very limited circumstances (for example, deduction of Income Tax).
Under the Act, employers must also:
- ensure that tips are distributed in a fair and transparent manner when the employer takes control of, or exerts significant influence over, their distribution;
- have regard to the Code of Practice on fair and transparent distribution of tips when they are distributing or influencing the distribution of tips;
- maintain a written policy on how tips are dealt with, and ensure it is made available to all workers;
- maintain a record of all tips paid and their allocation and distribution between workers, to which workers have the right to request access.
The aim of the Act is to is to ensure that tips left by consumers are going to workers as intended, and that all tips and service charges are allocated fairly and transparently.
The Department for Business and Trade has published an updated draft version of the Code of Practice on fair and transparent distribution of tips, and further non-statutory guidance will be published in due course. Employers must have regard to the Code when designing and implementing tipping policies and practices, and Employment Tribunals will have a duty to take the Code into account, where relevant, when hearing disputes related to tips.
For legal help or advice on employment law matters contact Emma-Louise Hewitt e.hewitt@sydneymitchell.co.uk or Carina Jheeta c.jheeta@sydneymitchell.co.uk on 08081668860.
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