gordons llp employment (allocation of tips) act

Employment (Allocation of Tips) Act: What You Need to Know

Tuesday 2nd May 2023

The Employment (Allocation of Tips) Bill has now received Royal Assent. The Act will provide clarity to the two million employees in the hospitality sector in England and Wales I in relation to the withholding of tips by employers.

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.

The tip allocation must take place on the premises where the tips were earned to enable customers to see that they are provided to the staff that they awarded them to.

Does this include agency workers?

Under this legislation, agency workers will also have 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. This will set out exactly how employers can ensure that the distribution of tips is fair and transparent and fits into their particular business model.

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 with for both employers and employees.

What should I do?

Employers affected by this legislation are recommended to implement a new policy to be released to employees to ensure clarity between employers and employees given the new rules.

Do you want an employment expert to prepare a tip allocation policy for your workplace? Get in touch with one of our team now.