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If you need legal advice concerning the laws surrounding tip allocation in the hospitality and leisure industry, please contact our expert lawyers on:
The Employment (Allocation of Tips) Act 2023 received Royal Assent on 2 May 2023.
The new law makes it unlawful for an employer to withhold tips, gratuities, and service charges (‘tips’) that are paid by its customers and requires employers to allocate tips to their hospitality and leisure workers in a fair and transparent manner.
This means that millions of UK workers will take home an estimated £200 million more.
The Act includes:
It is important to comply with the new Act as a worker can pursue a claim in the Employment Tribunal if their employer has failed to comply with the requirements of having a written policy or the rules around their tip records.
The usual time limits to pursue a claim in the Employment Tribunal apply, that is, three months less than one day from the employer’s alleged failure to comply with the Act.
If the Employment Tribunal rules in a worker’s favour, the Tribunal can:
In addition, if an employer has been ordered by the Tribunal to revise their tip allocation and this revision has resulted in tips being overpaid to workers, the employer will have no recourse.
This means that the employer cannot bring proceedings against the workers for the overpayment of tips and will have no choice but to absorb those losses.
Although the Act has received Royal Assent, it is not yet confirmed when the Act will come into force, but it is expected to be sometime in May 2024.
A statutory Code of Practice will support the measures in the Act.
This has not yet been released, but it is expected to be drawn up and formally consulted on later this year.
In the meantime, employers should review their current policies and practices on tipping to ensure they are ready to comply with the changes coming into force.
Employers may also consider engaging an independent tronc operator to distribute tips fairly and transparently.
An independent tronc operator is automatically considered as ‘fair’, which allows employers to focus on other parts of their business.
If you need legal advice concerning the laws surrounding tip allocation in the hospitality and leisure industry, please contact our expert lawyers on: