​Government Releases Preliminary Tipping Legislation Guide

The government has recently unveiled a preliminary guide about the forthcoming tipping legislation, which is set to be effective from July 1 2024. This directive, known as the Employment (Allocation of Tips) Act 2023, will be applicable across England, Scotland, and Wales. Its primary objective is to ensure a fair and equitable distribution of staff tips, gratuities, and service charges.

A period for public consultation on this draft code of practice is now open. Hospitality sector businesses and employees can share their input by February 22, 2024.

At a Glance: Key Features of the Bill

• The bill aims to ensure a "fair and transparent distribution" of "qualifying tips," defined as those under the employer's allocation control.
• Cash tips retained by workers without employer intervention are outside the bill's scope.
• Employers must adopt a fair principle in distributing funds among all staff, including permanent, agency, and zero-hours contract workers. Equal distribution is not mandatory, but the process should be free from discrimination and based on clear criteria like job role and customer intent.
• Regular staff consultation on tip distribution is mandated, influencing employment tribunal rulings in dispute cases.

Distribution Methods

• Employers can incorporate tips into the next payroll or use a 'tronc' system, managed internally or externally, for tip allocation.
• All tips must be shared within a month after their receipt.

Transparency Requirements

• Employers must document their tip acceptance and distribution policy, ensuring fairness in fund management.
• All employees, including agency staff, should know their tip entitlements.
• Policies must be communicated to staff, mainly when changes occur.
• A three-year record of tip receipt and allocation is mandatory.

Rights and Recourse

• Staff can request access to tipping records quarterly, going back up to three years.
• Tip complaints can be escalated to an employment tribunal, potentially leading to compensation.

Click here to view the complete guidelines and participate in the consultation.

We value your insights and experiences regarding this new legislation. Please share your thoughts and questions in the comments section below.