The Employment (Allocation of Tips) Bill has become an Act of parliament (law) by gaining Royal Assent. The Bill imposes unlawfulness for employers to withhold tips from staff and is expected to come into force in 2024, meaning that thousands of workers could be set to receive a higher take home wage, especially within the hospitality sector.

It has been reported that more than two million workers across the hospitality, leisure and services sectors will have their tips protected and be able to view an employer’s tipping record. In addition, helping to also ease cost of living pressures, an estimated £200 million a year will go back into the pockets of diligent staff by retaining tips that would have otherwise been deducted.

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.

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.

Business and Trade Minister, Kevin Hollinrake said:
‘‘As people face rising living costs, it is not right for employers to withhold tips from their hard-working employees.

Whether you are pulling pints or delivering a pizza, this new law will ensure that staff receive a fair day’s pay for a fair day’s work – and it means customers can be confident their money is going to those who deserve it.

I want to thank Dean Russell MP, Virginia Crosbie MP and all the campaigners who have helped make the Tipping Bill a reality and improved the lives of workers across the UK.’’

Through the Act, a new statutory Code of Practice will be developed to provide businesses and staff with advice on how tips should be distributed. Workers will receive a new right to request more information, relating to an employer’s tipping record, enabling them to bring forward a credible claim to an employment tribunal. However, businesses should act now to ensure that they are compliant when the new conditions come into force. An audit of current practices may be essential, to ensure that 100% of tips and service charges are allocated to relevant workers within the time period required.