The Employment (Allocation of Tips) Bill 2023

The Employment (Allocation of Tips) Bill 2023, otherwise known as ‘The Tips Bill’ was given Royal Assent at the beginning of this month, meaning that thousands of workers could be set to receive a higher take home wage, especially within the hospitality sector. 

What Does the Act Mean?

The act creates new legal obligations for employers who will be required to fairly allocate tips over which they exercise control or significant influence and pay them to workers in full, within a month of the payment being made by the customer. 

Where tips are paid on more than an occasional and exceptional basis, the employer will also be required to have a written policy, available to all workers, that sets out how qualifying tips are dealt with. This bill will therefore make it unlawful for service charges to be held back from staff, however it is paid by the customer, ensuring that staff receive the tips that they have earned.

Maintaining Tip Records

The act goes further than just the allocation of tips, and now means that employers must maintain a record of qualifying tips and their allocation, which must be kept for 3 years. As staff will have the right to request this information, it may result in challenges about their employers’ practices increasing, which could result in a higher uptake of employment tribunal claims.

Staff will be allowed to raise a complaint to the employment tribunal within 12 months of the failure to comply with the new obligations, once they officially come into force and these rights also extend to agency workers, which could widen the scope for tribunal claims considerably.  

Code of Practice

The government is also expected to produce a Code of Practice to provide businesses and staff with advice on best practises on how tips should be allocated. This will be subject to formal consultation later on this year.

Whilst the act is expected to come into force around May 2024, the government is yet to set an official date. However now it has passed the final stage of approval, it will most certainly be coming into force at some point within the next year. 

Need More Help?

Should you require assistance with understanding your new obligations or drafting a policy to ensure that you remain legally compliant, then please get in touch at [email protected]. 

For advice or for a free assessment contact us today