Tipping Act Update

Tip Allocation Law Update – Are you Keeping things Fair?

A new code of practice regarding the allocation and distribution of tips has been published this week. It addresses the new additions to the Employment (Allocation of Tips) Act of 2023. These additions will be coming into effect from the 1st of October 2024.

To help you prepare for these changes, we have put together the following advice note and poster summarising what to expect and how you can ensure that you are complying to these statutory laws.

A new Code of Practice on Fair and Transparent Tip Distributions was published this week. You can access it directly via the Gov.UK website, in summary the below changes will directly affect businesses where tips are received more than occasionally.

Whilst receiving tips can be seen as an added benefit for employees, employers must now ensure that tips are shared in a fair and transparent manner to eligible employees. Employers can utilise the newly published code of practice to help guide the creation and implementation of a Tip Allocation Policy.

Tips that fall under this Act can be monetary or non-monetary, any employer-received tip must be distributed in a fair way. Tips that employees receives without employer involvement e.g. keeping a cash in hand tip, would not fall under this Act.

The Code sets out three key principles for employers to consider:

1.Fairness

• Employers must ensure that tips are allocated and distributed fairly by considering objective factors such as type of role, hours worked during period where tips are received, length of tenure with the company. Further factors are outlined in the Code of Practice.
• It is imperative that employers do not intentionally or unintentionally discriminate against employees when applying these factors to tip allocations.

2. Transparency:

• Under the new sections of the Tipping Act, employers are required to have a formulated tipping policy that is readily accessible for employees. This can be electronic e.g. housed on a HR Platform, or a physical copy.
• Employees should also be able to access this policy in a format that suits them best e.g. ensuring the policy is accessible for employees with a disability.
• Updates to the policy should also be communicated clearly and promptly to employees.
• In addition to transparency of the policy, accurate records also need to be kept regarding how employers will handle each tip that is paid. Employees should have access to these records as and when requested in writing.

3. Addressing Problems

• If any disputes are raised regarding the distribution of tips, employers must handle these in a fair and equal manner.
• Disputes can first be addressed internally through recorded discussions, informal discussions with a mediator or through formal procedures such as following the outlined company grievance process.
• If internal routes cannot sufficiently resolve tipping disputes, employees can escalate this to an Employment Tribunal claim with ACAS. More information regarding the Tribunal process can be found here.

Download the full PDF HERE.