The Employment (Allocation of Tips) Bill received Royal Assent on 2 May 2023, becoming the Employment (Allocation of Tips) Act 2023. Applying to hospitality businesses, including restaurants, bars, and cafes, the act introduces new rules arounds tips and tipping, and is expected to come into force in May 2024.
The Act will require employers to fairly allocate tips over which they exercise control or significant influence (qualifying tips), and pay them to workers in full within a month of the payment made by the customer. Where tips are paid on more than an occasional and exceptional basis, the employer will also be required to have a written policy, available to all workers, that sets out how qualifying tips are dealt with.
The government intends to issue a statutory Code of Practice on the fair and transparent distribution of qualifying tips which employers must consider. Failure to comply with any code will be admissible in evidence in employment tribunal claims. The Department for Business and Trade will issue a formal consultation on the Code of Practice later this year.
In addition to this, employers will be expected to maintain a record of qualifying tips and their allocation, which must be kept for three years. Workers will have the right to request information about an employer’s tipping record, which should better enable them to challenge these practices through employment tribunal claims. Workers will be allowed to complain to an employment tribunal within 12 months of a failure to comply with the new obligations. The Act also gives equivalent rights to agency workers.
This is definitely one to watch if you’re in the hospitality sector! Get in touch if you would like our help getting prepared.
