What is the new Allocation of Tips Act?

The Employment (Allocation of Tips) Act 2023 and statutory Code of Practice on fair and transparent distribution of tips has come into force today. 

Employers are now required to pass all tips and service charges on to workers, without deductions. This applies to both cash and card payments. 

Tips must be distributed in a fair and transparent manner. From today, employers are required to have a clear written policy on how tips are to be dealt with, and the policy must be readily available to all workers. Furthermore, employers are now required to maintain a record of all tips received and must document how they have been allocated. It is important to note that a worker has the right to request to see the record. 

Employers need to ensure that they have regard to the Code of Practice when deciding how to allocate tips. 

If an employer is not passing on tips, a worker will be able to bring a claim in the Employment Tribunal. The Employment Tribunal can award compensation of up to £5,000 to a worker to compensate them for any financial loss suffered. 

Justin Madders, Minister for Employment Rights has commented that “[t]his is just the first step of many in protecting workers and placing them at the heart of our economy. We will be introducing further measures on tipping to ensure workers get their fair share of tips.”

If you need guidance on how the Employment (Allocation of Tips) Act and statutory Code of Practice will impact you or your business, please do not hesitate to get in contact with our employment law team.