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Articles Employment 4th Jan 2024

Draft Code of Practice on Allocation of Tips

New rules on tips are expected to come into force in July 2024 requiring employers to ensure that tips are allocated in a fair and transparent manner.

The Government has issued a draft Code of Practice on distributing tips fairly with consultation on this draft Code of Practice ending on 22 February 2024.

The draft Code has five sections:

  • Scope
    • Which workers are covered
    • What tips, gratuities and service charges are covered
  • Fairness
    • What is a fair allocation of tips? For example, there may be reasons why all workers do not receive the exact same allocation:
      • Type of role (eg front of house and back of house workers)
      • Basic pay
      • Seniority/level of responsibility
      • Individual or team performance
      • Length of service
      • Customer intention
    • Methods of allocation: for example, using an independent tronc operator
  • Transparency
    • Employers should have a written policy in place
    • Employers should keep a record of how tips have been allocated
  • Addressing problems
    • Employers should have fair processes in place for resolving issues and responding to queries.
  • Glossary of terms

Whilst the Code of Practice is only in draft form and may change after consultation, it is a useful starting point for those employers in relevant sectors who will need to ensure that they have adequate systems in place by July 2024

If you have any queries you would like to discuss regarding the draft code of practice on allocation of tips, please contact Rena Magdani or Matt McBride.

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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.

Author: Rena Magdani

Partner & National Head of Employment, Pensions & Immigration

Matt McBride

Author: Matt McBride


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