New law on the allocation of tips - What it means for employers

The Employment (Allocation of Tips) Act 2023 is due to come into force on 1 July 2024.

The Act places an obligation on employers to:

1. Ensure that all qualifying tips are allocated fairly between workers; and
2. Ensure that they have a written policy in place setting out how they deal with tips.

Guidance for things like:

1. What amounts to a qualifying tip; and
2. What factors you should be taking into account in determining how to allocate and distribute tips….

……is all contained in a draft statutory code of practice, consultation on which has recently closed, so we expect to hear shortly on that.

This will likely mean big changes for clients where tipping is standard.

You must have regard to the code when designing and implementing your policies and practices about this.

We recommend that you get ahead of the curve and start to look at steps you can take to prepare for these measures in advance, especially as changes can take a while to get in place.

These could be things like:

1. Reviewing the draft code; and
2. Auditing current tipping arrangements against the code to see how they measure up and what you need to do to ensure compliance.

Further non-statutory guidance will be published in due course to help parties interpret the legislation, but we do advise that you get that head start so please do contact the team if this affects you and we can help you with that audit and any necessary documentation too.