If you are in the hospitality business, you are likely aware of important changes coming in to force on 1 October 2024. The Employment (Allocation of Tips) Act 2023, called by many the ‘Tipping Act’ requires employers to ensure that the distribution of qualifying tips between workers is fair.

The ‘Tipping Act’ creates a legal obligation on employers across sectors to allocate all tips, gratuities and service charges (“qualifying tips”) to workers without any deductions. The distribution to be fair with the Tipping Act highlighting a code of practice to be followed, this code sits alongside the Act.

Whilst not stated as a directive in the actual Act, the Code of Practice states that employers should consult with workers to seek broad agreement in the workplace that the system of allocation of tips is fair, reasonable and clear, and the factors considered by employers must be stated in the tipping policy shared with workers.

Advo HR provided guidance to our hospitality clients last year which outlines to all clients in this sector what they will need to know about the new changes coming into force. You can read the Advo HR guidance that covers areas that need attention, how your business is affected and what you need to be doing and wider background, which is still valid, here.

It is recommended that employers outline their own rules on allocation of tips. There are a number of factors to be considered when doing this. The Advo guidance will help you with this.

Those who break the rules may find themselves facing employment tribunals and prosecution. Under the new regulations, tribunals will have the authority to award workers up to £5,000 in compensation to cover any financial losses incurred due to their employers’ failure to pay them their tips incorrectly or at all.

If you are uncertain about how the new laws affect your own business, just reach out to us.