The Employment (Allocation of Tips) Act 2023 (the Tips Act) and its accompanying statutory Code of Practice will come into force on 1st October 2024. This was confirmed by commencement regulations for the Act and Code of Practice which were laid before Parliament in July.
Key features of the Tips Act include:
- employers are required to pass on tips in full to workers;
- tips must be allocated in a fair and transparent way;
- employers of businesses where tips are left more than occasionally are required to have a tipping policy in place;
- tips must be distributed within one month following the month in which they were received;
- cash tips which are paid directly to the worker by a customer, together with tips a customer pays direct to workers digitally via an app where the employer has no involvement, are not ‘employer-received’ and are therefore outside the scope of the regulation of the Tips Act;
- workers have a right to request a copy of their tipping record in order to enable them to bring a claim to Employment Tribunal where they believe they are not receiving the tips they should be;
- employers are required to maintain a record of how every tip has been dealt with for three years from the date the tip was paid; and
- Employers must have regard to the new statutory Code of Practice when distributing tips. The Code of Practice is not legally binding but will be taken into account by employment tribunals in proceedings where relevant.
The Code recommends consultation in advance with workers regarding the content and implementation of a tips policy. This is not a legal requirement but will help businesses to encourage employees to buy-in to this approach to tip allocation. Employers considering taking this step should prioritise putting together a draft tipping policy and consulting employees on it now, before the Tips Act comes into force on 1st October.
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