New Employment legislation regarding the allocation of tips and gratuities

Tips: The new rules require employers to pass on 100% of tips without deductions (other than tax) to their staff (including employees and workers) within around one month of receiving the payment. 

Policy: Employers will also be mandated to have a written policy in place dealing with the fair allocation of tips and gratuities available at the workplace. It is not necessarily requiring a uniform allocation of tips between all staff, however, care will need to be taken to consider the appropriate distribution criteria. 

Records: Employers will also be required to keep records for three years and can decide to use Tronc schemes, both internal and independent. Employee’s will have the right to request copies of the records. 

Timing: The new rules will now come into force on 1st October 2024, rather than 1st July 2024 as originally proposed.  

A Statutory Code of Practice will also be implemented to promote fairness and transparency in the distribution of tips, and there was a consultation on this between December 2023 – February 2024.   Employers will have to have regard to the Code when they are implementing their tipping policies and practice.  You can see the proposed code here: Draft code of practice on fair and transparent distribution of tips (HTML version) - GOV.UK (www.gov.uk) 

Potential claims:  Workers who consider that their employer has failed to deal with tips fairly or within the timescales, will be able to apply to ACAS for mediation (early conciliation) and then raise a complaint with the Employment Tribunal. The usual three months’ time limit will apply to some complaints, with an unusual extension to 12 months for failure to pay tips or allocate fairly.  

This is a big development in the legislation surrounding the allocation of tips, so if your business operates in the hospitality sector or otherwise receives gratuities, you will need to implement a new policy and review your current processes to ensure you can comply from 1 July 2024. Please contact us if you would like help with this: 01635 896336/ hello@fentonelliott.co.uk