The Employment (Allocation of Tips) Act 2023 will be coming into force from October 1st. This will see hospitality businesses needing to amend their policies and tipping allocation procedures imminently.
The law, nicknamed ‘The Tipping Act’ was part of a public consultation that began in 2016 to protect over 3 million workers by providing a fair share of tips received by the companies.
As a part of the Act, employers are required to pass 100% of tips received to their workers without any deductions. The Act requires the tips to be allocated in a fair and transparent manner. In doing so, the employer must have consideration to ‘clear and objective’ factors such as:
Type of role or work
Basic pay
Individual and/or team performance
Seniority or level of responsibility
Length of time served with the employer
Customer intention
Employers must also have written policies regarding the allocation and management of tips that they receive.
The tips paid must be done so within one calendar month, with records kept of such payments made. Additionally, workers under the new law have a legal right to request information concerning their current, prospective or previous employer’s tipping record, and that such workers are able to bring claims to an Employment Tribunal. If an Employment Tribunal finds that a claim is credible, they are able to make a public declaration of such, as well as order the previous or current employer to pay compensation or revise a previous distribution of the relevant tips.
The new law prevents employers from altering their employees’ salaries or hourly rates from the tipping change, as the tipping amounts would not be included in the national minimum wage. Finally, the Act also alters the definition of wages, as currently codified in the Employment Rights Act. The new definition will include gratuities, tips and service charges together.
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