Employment (Allocation of Tips) Bill receives Royal Assent

The government is expected to bring the Employment (Allocation of Tips) Act 2023 into force in 2024.

The Employment (Allocation of Tips) Act 2023 imposes statutory obligations on employers to allocate tips, gratuities, and services charges to workers without making any deductions. Consequently, withholding tips from staff becomes unlawful resulting in more than 2 million workers’ tips being protected. It is estimated by the government that £200 million a year will go back to workers that would have otherwise been withheld from them.

The Act also provides that Agency workers cannot be excluded or disadvantaged from this benefit. Therefore, under the new legislation, agency workers also gain the statutory right to receive a share of their tip.

The new legislation once in effect will include:

• An obligation on organisations to fairly allocate tips, gratuities and service charges over which they exercise control or significant influence and pay them to workers in full within a month of the tip being paid by the customer.
• Where tips are paid on more than an occasional and exceptional basis, an employer must have a written record and policy, available to all workers, setting out how qualifying tips are dealt with. The records must be maintained for a three-year period beginning with the date on which the qualifying tips, gratuities or service charge were paid.
• Employees have the right to request information about the employer’s tipping record.

The consequences for non-compliance may include an award up to £5,000.00 per Claimant to reflect the additional financial losses caused by non-payment. Workers will have 12 months from the date of non-compliance to raise a claim in the employment tribunal if the employer has not complied with their obligation to fairly allocate tips within a month of the tips being received. In the event the employer has failed to comply with their obligation to have written polices and keep records under the Act, workers have three months to bring a claim in the employment tribunal.

Whilst the Act is due to come into force in 2024, employers in the hospitality, leisure and service sectors may wish to review their policies and practices now to ensure that they are compliant with the Act by the time it comes into force.

Our Employment Law team is able to assist you with a review of your policies and employee handbook and can help you identify any potential risks to be addressed in your current practices.

If you require any employment advice, please contact our Employment Law team on 01604 828282 / 01908 660966 or email info@franklins-sols.co.uk