Important changes to tipping

This month, the Employment (Allocation of Tips) Act 2023 (also known as the Tipping Act) has come into force and introduces new requirements for employers to distribute all tips, gratuities and/or service charges fairly and transparently to their workers, without deductions (aside from usual tax and NI deductions), and within one calendar month.

The Act also requires that employers should have a policy in place, which is accessible to all workers, and outlines how their tips are managed.

This must include how employers will keep a record of all tips given within the last three years, and how these were distributed within the workplace.

This is particularly relevant as employees will now have the right to view the employer’s tipping records and, where these regulations are not met, employers could be liable to receive unlawful wage deduction claims from their employees.

A Statutory Code of Practice around the distribution of tips and service charges has been released by the Government which provides further detail and also indicates how tips can be allocated, and any valid reasons why the proportions of tips may vary between workers (e.g. type of role, hours worked).

Read Acas advice for further information: Tips and service charges