Understanding the Impact: The Employment (Allocation of Tips) Act 2023 and Your Business

The Employment (Allocation of Tips) Act 2023, having received Royal Assent, is set to commence operation around May 2024. A boon for an estimated 2 million workers, this legislation assures fair allocation of tips, gratuities, and service charges paid by customers.

So, what does this mean for employers?

The Act carries significant importance for the hospitality industry, including restaurants, bars, pubs, hotels, and cafes. In the near future, the Secretary of State will develop a Code of Practice to promote fair and transparent distribution.

Here are some key changes that the Act brings:

• Employers will be required to keep a record of qualifying tips and their allocation for three years
• Workers can request information about their employer’s tipping record, including business earnings and distribution
• Workers now have the right to file a complaint with the Employment Tribunal if their employer does not comply with the new duties, with a more flexible limitation period of 12 months to bring a claim
• Tribunals have the power to order that tips are paid to all employed workers, not just the Claimant
• Tribunals can also award up to £5,000 per Claimant to compensate for any additional financial losses due to the employer’s non-payment.

When we refer to ‘workers’, we also include agency workers.

So, what’s next for businesses?

This is the first time that there will be an express statutory requirement for employers to have a formal written policy in place. In this instance, regarding the handling of tips. Although the enforcement date is yet to be announced, it is vital to keep an eye on this development and to ensure that a legally compliant policy is in place by that date.

How can Gorvins assist you in navigating these changes?

At Gorvins, our employment team will be closely monitoring the implementation of this legislation. We are here to make sure your business fully understands the new obligations and also the rights of your workers. We can help you craft a tailored, accessible policy that meets the unique needs of your business while maintaining legal compliance.

To get started, call us 0161 930 5151, email us at employmentteam@gorvins.com, or complete our online contact form.