The UK hospitality sector is making a shift towards more transparent tipping practices as the Employment (Allocation of Tips) Act comes into effect on 1 October 2024.
Under this new legislation, employees are entitled to receive the entirety of the tips and service charges earned.
The Act, accompanied by a statutory Code of Practice, introduces measures aimed at standardising tipping procedures across the hospitality industry.
These changes are expected to not only enhance transparency but also ensure that employees benefit fully from their earned tips.
Hospitality operators are now mandated to distribute 100% of tips and service charges directly to their staff. Moreover, they are required to do so by the end of the month following receipt.
The allocation must occur at the workplace where the tips were given, preventing the pooling of tips across multiple locations.
The legislation also necessitates the implementation of a clear written policy for tip allocation.
Importantly, it includes provisions for agency workers and those on zero-hours contracts, granting them a share of any tips received during their shifts.
The UK Department for Business and Trade has projected that the new tipping law will redirect approximately £200m to employees, funds that previously could have been retained by employers.
Should an employer fail to comply with the new requirements, employees have the right to file a claim through an employment tribunal.
In such cases, they may be eligible for compensation up to £5,000, reinforcing the law's intent to protect workers' income from tips and service charges.
UK Minister for Employment Rights Justin Madders said: “When you tip someone for good service, you expect them to keep all their tip. They did the work – they deserve the reward.
“This is just the first step of many in protecting workers and placing them at the heart of our economy. We will be introducing further measures on tipping to ensure workers get their fair share of tips.
“Britain’s outdated employment laws require an urgent update. This government will ensure they are fit for the modern economy and deliver on our plan to Make Work Pay.”
