The Employment (Allocation of Tips) Act 2023 has received Royal Assent and will ensure that roughly two million employees not only have their tips protected but will be able to see an employer’s tipping record.
The Government has said that employees will collectively get roughly £200 million back into their pay slips by keeping tips that in some businesses would have been withheld.
Government supports new law on tips
A new statutory code of practice will be issued alongside the Act to give employers and staff guidance on how tips should be fairly allocated amongst employees.
The Bill now gives more rights to employees for example, if a worker asks for further information on an employer’s tipping record, dependent on the information, this could provide them with enough to bring a claim to an Employment Tribunal.
However, it is important to note that the Act will not come into power until 2024, after a consultation and secondary legislation.
This legislation has been sponsored by Conservative MP for Ynys Mon, Virginia Crosbie, who commented:
“Driving it forward was all about fairness for workers and for those who give tips for good service. It was never right that a minority of companies could pocket tips when the public wanted them to go to the person who served them or made their food.
The law will now boost wages for what are often lower paid jobs and not boost company profits at the expense of hard-working staff. But it is also about valuing the people who do important jobs in our economy, especially in tourist areas like Anglesey, and I am proud to have played my part.”
Virginia Crosbie said she acknowledges that most employers are ‘doing the right thing’ but said the Act will help ensure a ‘level playing field’.
The success of the Act will have the biggest impact on the hospitality industry, where the majority of employees rely on their tips to increase their wages.
Chief Executive of industry body, UK hospitality, Kate Nicholls, said:
“Fantastic hospitality experiences don’t happen without a huge effort from our teams, both front and back of house, and tips are a generous way of customers showing their gratitude, while providing a welcome boost to employees’ earnings.
Tips are just one part of what makes working in hospitality a great job and career.”
Previously, there were no rules in respect of tips paid via debit or credit card and it was up to the employers as to whether they kept the tips or passed them on to their employees. Cash tips legally belong to employees.
However, the majority of people in the UK now pay with a card. Further, the Government has stated that 80% of all tips are now paid via card, meaning this is much more significant.
A date for the legislation to come into force will be announced later this year, along with the associated code of practice, which will be published after a formal consultation.
Comment
The timing of this is likely to prove unpopular with those running hospitality businesses given the impact already being felt with the cost of living crisis, supply chain issues, and rising energy costs.
However, those employers who already share out credit card tips amongst staff voluntarily might welcome the levelling of the playing field.
Certainly, those who pay tips on cards or otherwise will welcome this reassurance that their tips are going to the staff that earned them.
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Laura Kearsley is a Partner in our expert Employment Law team.
If you would like any advice in relation to the subjects discussed in this article, please contact Laura or another member of the team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online enquiry form.
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