The Employment ‘Allocation of Tips’ Bill received Royal Assent

The Employment (Allocation of Tips) Bill received Royal Assent in May 2023, with implementation expected at some point in 2024.

The Government estimates that £200 million a year will go back into the pockets of hospitality staff as it will make it unlawful for businesses to hold back service charges from their workers and requires businesses to fairly allocate the tips between their workers.

The Regulations will be accompanied by a Code of Practice, which has not yet been published, so the precise requirements of “fair allocation” are unknown. The Regulations will also require:

• businesses to have a written policy in place governing how they deal with tips, and such a policy must be available to all workers. Some businesses may already have policies in place. Others may want to wait until the Code of Practice is published before finalising their policies.
• businesses to maintain records for three years.

In terms of enforcement, workers can make claims to the Employment Tribunal about the allocation of tips or about the failure of a business to comply with its obligations (eg the failure to have a policy in place) and

• such claims can be brought within 12 months of the alleged failure
• the Tribunal may order the employer to revise its allocation of tips (i.e. to pay the claimant and any others affected by the failure)
• pay compensation to a worker of up to £5,000 to compensate for financial loss sustained by the worker as a result of the failure

If you have any queries on this article, get in touch with Rena Magdani & Matt McBride.

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Read the other topical articles from our June 2023 Employment Law Update:

• New family friendly legislation: three government-backed Private Members Bills received Royal Assent
• The sunset of EU-derived law is cancelled, but there may be some reform of employment law
• Calculation of holiday pay within a relevant agreement

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The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.