The new law aimed at protecting workers’ tips came into effect on October 1, 2024, in Scotland England, and Wales.
The Employment (Allocation of Tips) Act 2023 makes it illegal for businesses to withhold tips or service charges from their staff.
Under the new legislation, all tips, whether paid in cash or by card, must be shared among workers.
This change is expected to benefit over 2 million workers across various sectors, including hospitality, leisure, and services.
The government estimates that workers will collectively receive an additional £200 million annually as a result of this law.
Tips must be passed on to employees without deductions, and employers are required to distribute them fairly and transparently.
Additionally, tips must be paid to workers by the end of the following month, and businesses are mandated to have a written policy on tip allocation.
Workers also have the right to request information about their employer’s tipping record.
The law introduces a statutory Code of Practice that provides guidance on fair tip distribution.
This code allows for flexibility in allocation based on factors such as job roles, performance, and seniority.
For businesses, the new legislation means adapting their practices to ensure compliance.
Some may need to revise their cash flow management, as they can no longer use tips to boost revenue.
However, the change is expected to improve employee satisfaction and retention rates.
Workers who believe their employer is breaking the new rules can bring a claim to an employment tribunal.
This legislation marks a significant step in protecting workers’ rights and ensuring they receive the full benefits of their hard work and customer appreciation.
