New Tips Regulation
The New Employment (Allocation of Tips) Act
There are many sectors where our members could receive tips, it isn’t just limited to hospitality and leisure, this also affects our private hire, delivery workers, casino and refuse workers etc.
Please be aware that the new Employment (Allocation of Tips) Act has received Royal Assent and is expected to come into force on 1 October 2024.
GMB London has been campaigning against unfair tipping practices for over 10 years.
The Employment (Allocation of Tips) Act 2023 will make it mandatory for employers to pass on all tips to workers in full without deductions. This includes agency and zero-hours workers.
Employers will be required to fairly allocate tips to staff in line with a statutory code of practice and have a policy explaining allocation. The statutory code of practice will provide guidance to employers and workers in tipping industries on the fair and transparent allocation and distribution of tips, gratuities and service charges.
Key features of the new rules: The Act will make it illegal for employers to withhold tips from workers.
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Employers are not allowed to use tips and gratuities to ‘make up’ national minimum wage or contractual rates of pay.
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Employers cannot make a deduction from an employee’s wage concerning a tip or gratuity (including admin charges), other than those deductions required by tax law.
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Employers cannot keep any share of electronic tips, except if paying tax or bank charges that have arisen from providing electronic modes of tipping.
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Employers will be required to distribute tips in a way that is fair and transparent.
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There must be a clear display and understanding of a business’ policy on how tips, gratuities and service charges are distributed with a record of how tips have been dealt with. Distribution must occur no later than the end of the month following the month in which it was paid by the customer
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Employers will have to work within a statutory Code of Practice on Tipping.
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Workers will be given the right to make a request for information relating to an employer’s tipping record, enabling them to bring forward a credible claim to an employment tribunal.
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decide (with worker agreement) a fair system for allocation of tips.
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write to workers to confirm their allocation of tips.
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agree and distribute a Fair Tips Policy to workers (all staff need access to this policy or be given a copy).
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ensure that all tips are paid to the worker by the end of the month following the month in which the tip was paid.
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create a tipping record database (employers will need to show details of the amount allocated to each worker) this database will need to be kept for 3 years and workers will be allowed to request to see this data.
The Labour Party may still “strengthen” this legislation because as it stands, it has come from the previous Government.
See the Code of Practice.
