Tipping Bill receives Royal Assent

Employers will be banned from withholding tips under the Employment (Allocation of Tips) Act 2023, which received Royal Assent yesterday.

This Bill will make it unlawful for businesses to hold back service charges from their employees and is expected to come into force in 2024, following a consultation and secondary legislation. The official date the legislation will become law will be confirmed later this year.

A statutory Code of Practice will be developed to provide businesses and staff with advice on how tips should be distributed. On top of this, workers will receive a new right to request more information relating to an employer’s tipping record.

Business and trade minister Kevin Hollinrake said: “As people face rising living costs, it is not right for employers to withhold tips from their hard-working employees.

“Whether you are pulling pints or delivering a pizza, this new law will ensure that staff receive a fair day’s pay for a fair day’s work – and it means customers can be confident their money is going to those who deserve it.”

UKHospitality chief executive 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.

“We’re pleased to support this new piece of legislation as it comes into law today and look forward to working with the government and other stakeholders on a code of practice that ensures a fair distribution of gratuities amongst all who contribute to providing great hospitality.”

Michael Kill, chief executive of the Night-Time Industries Association (NTIA), said: “Tipping is the customer's opportunity to reward people for delivering above and beyond expectation and goes a long way to enhancing workers earnings across the sector.

“We welcome news that the government have taken the step to protect employees' gratuity payments. It seems almost surreal that we have had to legislate to ensure that a few unscrupulous employers are unable to withhold tips.

“We are looking forward to working with government departments and stakeholders in developing a code of practice.”

The government has estimated the additional costs to be borne by businesses as a result of the bill, which prevents money gathered by tips being used for administrative costs including credit card permissions, will be approximately £140m.

The new legislation also gives staff the power to take any grievances related to tips to an employment tribunal, which can award a compensatory order of up to £5,000. A tribunal will also be able to give a similar order to every other affected worker, even if they have not brought a claim themselves.

Find out how the Tipping Bill will impact your business in The Caterer's tipping summit.