The Employment (Allocation of Tips) Bill received Royal Assent on 2 May 2023, becoming the Employment (Allocation of Tips) Act 2023 (“the Act”). The Act will prevent employers from deducting money from workers’ tips as far back as 2018 and is expected to come into force in 2024 following further consultation and secondary legislation.
Background
As far back as 2015, there were various media reports of unfair tipping practices by major restaurant chains and other hospitality businesses, such as deducting from tips before passing them on to workers. This led to calls for reform requiring employers to pass on all tips and service gratuities in full.
In 2018, the UK Government announced its intention to legislate to prevent employers from making deductions from tips, although measures to meet this commitment originally proposed in the December 2019 Queen’s Speech were not taken any further forward. The Employment (Allocation of Tips) Bill was then introduced to the UK Parliament as a Private Member’s Bill.
What does the Bill do?
The Act will amend the Employment Rights Act 1996 to require employers to ensure that tips, gratuities and service charges (in which they exercise control or have significant influence) must be paid to workers in full without deductions and by the end of the following month. It also introduces obligations to ensure the fairness of arrangements to distribute those tips among workers, either when distributed by the employer or via an independent tronc. This includes requiring employers, in circumstances where tips are paid to staff on a more than occasional and exceptional basis, to have a written policy available to all workers that sets out how qualifying tips are dealt with.
The UK Government has predicted that the Act will benefit more than two million workers and, for the first time, will give workers the right to see an employer’s tipping record. Employers will have a duty to maintain a record of qualifying tips and their allocation, which must be kept for three years. The Act also makes clear that workers can complain to an employment tribunal within 12 months of a failure to comply with these new obligations for any withheld sums.
A new statutory code of practice will also be developed to provide businesses and workers with advice on how tips should be distributed.
How can we help?
If you have any queries about what these changes mean for you or your business, please get in touch with a member of our Employment team.
