Employment (Allocation of Tips) Act is coming into force
Wednesday 21st August 2024
The Employment (Allocation of Tips) Act 2023 will come into force on 1 October 2024. The act will regulate how tips are allocated to workers by their employers, aiming to ensure that tips are distributed in a fair and transparent manner.
The Act will provide clarity to the two million employees in the hospitality sector in England and Wales in relation to the withholding of tips by employers, thereby further safeguarding their interests.
What is included in the Employment (Allocation of Tips) Act?
The Employment (Allocation of Tips) Act creates a legal obligation on employers to ensure that all employees are allocated 100% of any tips or service charges, save for any statutory tax or National Insurance deductions. Employers will be required to keep a written record of how the tips have been dealt with for up to 3 years.
Furthermore, payment of the tip must be made no later than the end of the month after it was paid by the customer.
To enable customers to see that tips are provided to the staff they intended to award them to, tip allocations must take place on the premises where the tips were earned, hence they cannot be distributed between venues.
Does this include agency workers?
This legislation aims to equally protect agency workers, giving them a statutory right to receive their share of tips. Therefore, they cannot be excluded or disadvantaged from this benefit just because they were recruited through an agency.
What else is included in the Act?
The new legislation will be accompanied by a new Code of practice on fair and transparent distribution of tips. This Code sets out exactly how employers can ensure that their model for allocating tips complies with fairness and transparency requirements.
How will this Act affect your business?
It is anticipated that this certainty will increase morale and workplace performance in the hospitality sector. Some other countries, such as America, already have similar rules in place which have proven to be a success for both employers and employees.
What should I do?
Employers affected by this legislation are recommended to implement a new policy before the deadline, and to communicate any changes so that employees understand their new rights.
Do you want an employment expert to prepare a tip allocation policy for your workplace? Get in touch with one of our team now.
