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As part of the significant employment law changes for 2024, it will become a legal requirement for tips, gratuities and service charges paid by customers to be distributed fairly to workers, without deductions, no later than the end of the following month after receipt from the customer. The main obligation of this legislation is to ensure that 100% of tips are passed to workers (less tax and NI).
Most of the substantive provisions of the Tips Act are not yet in force. They are expected to come into force on 1st October 2024 but the outcome of the general election may alter this.
The Government believes tips, gratuities and service charges should go to workers, rather than employers as tips are intended to reward staff for hard work and good service, and they should be distributed fairly and transparently. The Employment (Allocation of Tips) Act 2023 introduces legal obligations to regulate how employers allocate tips among workers.
The Tipping Act will apply to pubs, restaurants, cafes, bars, clubs and other leisure businesses where tips are non-incidental (i.e. once or twice a year). Tips paid by cash or card, and which are controlled by the employer must be managed under the Act. Tips given direct to an employee where the company do not have any control will not be subject to the legislation.
Under the Act, tips must be distributed fairy to all workers, including zero hours and agency staff with regard to the place of work and where the tip was received. This means that if workers are placed at different sites, they will be entitled to a proportion of tips from each site.
The Company’s policy must also include how a worker can raise a compliant and how this will be dealt with by the Company.
Ultimately an employee can refer a claim to ACAS and can make a claim to an employment tribunal.
Your dedicated HR Advisor at Stallard Kane can support in ensuring you meet your legal requirements from 1st October 2024.
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