Government pushes back changes to tipping law until October

The government has delayed the implementation of new rules setting out how tips must be distributed until 1 October 2024.

The announcement was made today (22 April) as the Department for Business and Trade published an updated code of practice, following a consultation with the hospitality industry.

The Employment (Allocation of Tips) Act 2023, which will cover England, Scotland, and Wales, is designed to ensure tips, gratuities and service charge are fairly distributed to staff. It had been due to come into force on 1 July 2024.

The key points of the legislation remain unchanged, and the bill will still require employers to pass on 100% of tips and service charge to staff.

Hospitality operators must have a written policy on how tips are accepted and shared out as well as how they ensure funds are being handled fairly.

Employees, including agency workers, must be made aware of their entitlement to tips and funds must be distributed to employees by the end of the month after they are received.

The updated code of practice did provide further clarification on the factors employers can consider when drafting a policy for the fair allocation of tips. This includes hours worked, role and basic pay rate, length of time served with the employer and customer intention.

The updated list allows for adaptations to be made regarding agency workers, as long as the resulting tips policy can still be considered ‘fair’. The updated code has also clarified that once tips are passed on to the agency who provided the worker it will have the legal responsibility to ensure monies reach them in full.

The updated code also includes advice to employers to consult with their workforces in developing policies and set out that their perception on whether a policy is ‘fair’ would be considered in any dispute.

Within the consultation response, the government also confirmed that businesses will not be able to control when tips are distributed to ensure employees receive similar amounts throughout the year.

Clarification was also provided that cash tips and those made on digital platforms directly to staff are not included within the scope of the bill, as long as the employer exercises no control and has no involvement in their receipt.

The bill, which was passed by parliament last year, gives individual members of staff the right to make a written request once every three months to view the tipping record of their employer dating back up to three years.

The act will also give staff members and agency workers the right to take complaints over tips to an employment tribunal, which could see them paid compensation.

The updated code of conduct and consultation response can be found here.