NEW LEGISLATION: The New Law on Tip Allocation and Code of Practice Effective from 1st October 2024

The Employment (Allocation of Tips) Act 2023 (referred to as the Tips Act) and its accompanying statutory Code of Practice became law on 1st October 2024: Code of practice on fair and transparent distribution of tips (HTML version) - GOV.UK (www.gov.uk)

Key provisions include:

· Employers are obligated to pass all tips on to workers in full.

· Tip allocation must be conducted transparently and fairly.

· Businesses where tipping occurs frequently are required to establish a formal tipping policy.

· Tips must be distributed within one month following the month they were received.

· Cash tips given directly to workers by customers, as well as digital tips paid directly to workers via an app (where the employer is not involved), are not ‘employer-received’ and therefore fall outside the remit of the Tips Act.

· Workers have the right to request their tipping records if they suspect they haven’t received the appropriate share of tips, enabling them to pursue a claim in the Employment Tribunal.

· Employers must maintain detailed records of tip distribution for three years from the date of payment.

· Employers must also adhere to the statutory Code of Practice when distributing tips. While the Code is not legally binding, it will be taken into consideration by employment tribunals during relevant disputes.

The Code encourages employers to consult with workers about their tipping policy’s content and how it will be applied. If you have any questions or concerns about how this impacts your business, please contact our Employment Team today on 01635 896336 or hello@fentonelliott.co.uk