As of 1 October 2024, the Employment (Allocation of Tips) Act 2023 is in force, which means employers must ensure that workers receive tips, gratuities and service charges (over which an employer exercises control or significant influence) in full, and those tips must be allocated fairly and transparently. A policy on how tips are dealt with must be in place (and made available to workers), and records of all tips paid and their allocation and distribution between each worker must be maintained (and accessible by workers). This will impact businesses in a number of industries, but particularly those in hospitality.
Employers must have regard to the statutory Code of Practice when dealing with tips. The Code of Practice outlines the scope of the new obligations, as well as the key principles of fairness (suggesting factors for employers to consider when developing their tipping policy and methods of allocation/distribution) and transparency (in terms of workers’ access to the policy and records). It includes a section dedicated to ‘addressing problems’ (which refers to the use of ACAS to help resolve disputes, with ultimate recourse to the Employment Tribunal).
New non-statutory guidance, released at the end of September 2024, supplements the Code of Practice and provides clarity on certain issues, including confirmation that agency workers must be accounted for when considering the distribution of tips, and clarifying that tips cannot be pooled across multiple sites or different branches. It contains template documents (including a tipping policy and tipping record template) to assist employers.
Ultimately, if an employer fails to fairly allocate or pay tips, or does not comply with its obligations regarding a written policy or record keeping, this could result in workers making claims in the Employment Tribunal. It is therefore vital that employers who operate in industries where employees receive qualifying tips comply with the new obligations and put the necessary frameworks and paperwork in place.
Should you need support in ensuring your business is compliant, or if you wish to discuss any of the issues raised in this article, please do not hesitate to contact Robert Forsyth.
