In our last update on the Employment (Allocation of Tips) Act 2023, which is also known as the ‘Tipping Act’, we reported that a new Code of Practice would be introduced to accompany the legislation. We can confirm that Just before the dissolution of Parliament last week, the new Code was approved and will come into force on 1 October 2024.
New Legislation and Code of Practice
The new legislation, along with the ‘Code of Practice on Fair and Transparent Distribution of Tips,’ aims to improve fairness for workers regarding the allocation of tips. It ensures consistency in employers’ obligations and provides clear rules. Research over the last few years has highlighted significant issues where some employers have acted unfairly in processing tips, leading to an estimated £200 million being withheld from workers, affecting more than 2 million workers.
Government’s Aim and the Importance of Compliance
By introducing this Act, the Government aims to move from a self-regulated approach, where employers only have a best practice code for managing service charges, tips, and gratuities, to a regulated approach with an accompanying Code of Practice.
What This Means for Employers
Businesses must start preparing now to ensure compliance with the Act from 1 October 2024. Here are some steps employers should consider:
- Identify all workers entitled to a proportion of tips and service charge payments received.
- Set up an appropriate system to ensure all payments received are captured in the ‘pot’ for distribution.
- Set up appropriate systems or documentation for maintaining a complete record of payments received.
- Decide at what intervals payments will be made.
- Consider factors for determining the fair and transparent allocation of payments, in line with the Code.
- Decide who will be responsible for allocating payments to workers.
- Consult with workers to seek a broad agreement on the approach to allocating and distributing payments.
- Have a written policy that clearly sets out the process.
- Determine how and when to communicate the policy to customers.
- Develop a process for handling non-adherence to the policy by workers.
- Develop and update existing employment documentation (letters, contracts, handbooks).
- Train managers to ensure they understand how tips are handled.
We’re Here to Help
If you would like support in complying with the new legislation and Code of Practice, please contact us on 0844 324 5840, or send us an online enquiry by clicking here.
