The Employment (Allocation of Tips) Act 2023 (“the Act”) comes fully into force today, 1 October 2024.
Previously, cash tips paid to workers were the legal property of the worker they were paid to. However, card payments were usually money owned by the business. The aim of this legislation is to ensure that ‘qualifying tips’ are dealt with in a fair and transparent way.
Qualifying tips are tips that the employer receives or tips which the employer exercises control or significant influence over. Typically, this will be when the employer receives the tip (such as via a card payment) and then allocates it to workers or when employers tell staff how to distribute cash tips (such as sharing them amongst staff). Qualifying tips can also be non-monetary such as casino chips. Cash or digital tips paid directly to the employee of which the employer has no control or involvement over is out of scope for this Act.
In summary, employers’ obligations under the Act are as follows:
- Employers must have regard to the Code of Practice on Fair and Transparent Distribution of Tips (“the Code”).
- Employers should have a written policy on how they deal with tips, and this policy should be accessible to all workers;
- Workers have the right to access this record. They are entitled to make one request for access in a three-month period;
- All tips should be passed on to workers (which includes agency staff but not those genuinely self-employed);
- Tips should be passed on in a ‘fair and transparent’ manner;
- Tips should be paid to workers by the end of the month from which the tips are paid by customers; and
- Employers should maintain a record of all tips paid to workers for 3 years.
Workers will have the right to bring a claim in the Employment Tribunal for a failure to comply with the requirements surrounding fair allocation and distribution, and/or the requirements surrounding the written tipping policy and tipping records.
The Employment Tribunal can make a public declaration of non-compliance and award compensation (including to other workers at the relevant place of business who have not actually made a complaint to the Tribunal). Further, unlike most other employment claims, of which the limit is usually 3 months of the act complained of, the time limit for pursuing claims under this Act is within 12 months of the failure to comply.
If you are an employer where tips are paid to workers we recommend that you review the Code in order to fully understand the obligations and if you require any further assistance then please contact us at info@justemployment.com or here to see how we can help you.
