As of October 1st, new tipping legislation has come into effect, requiring businesses to pass 100% of tips and service charges directly to employees.
The Employment (Allocation of Practice) Act and statutory codes of practice have introduced a number of changes aimed at making tipping practices more transparent and consistent across all hospitality businesses.
The Ministry of Enterprise and Trade estimates that as a result of these changes, about 200 million pounds, which would have previously remained with employers, will now be transferred to employees.
If the employer does not comply with the law, employees have the right to take a claim to an employment tribunal and seek compensation of up to £5,000.
Operators are now required to:
Pay all tips to employees by the end of the month following receipt.
Distribute tips to employees in the workplace where they are earned, rather than distributing them to a group.
Create a written policy on tipping.
Make sure temporary workers and people on zero-hours contracts get a portion of the tips they earn during their shift.
Employment Justice Minister Justin Madders said: “When you tip someone for good service, you expect them to keep all their drinks. They did the work – they deserve a reward.
This is just the first step of many to protect workers and put them at the heart of our economy. We are introducing additional measures for tips to ensure that employees receive their fair share of tips.”
Kate Nicholls, chief executive of UKHospitality, stated that the association supports the changes, stressing that they formalize practices that have been “common in the industry” as businesses have been preparing for this legislation for many years.
He added: “There will of course be an administrative burden associated with the new rules and there will be additional costs for businesses to comply with in practice. It’s another example of imposing costs on an industry that can least afford it, and we continue to call on the Chancellor to ease the cost burden on hospitality in the Budget, primarily by taking action to avoid the £billion corporate interest bombardment that is set to hit the industry. next year when the relief ends.”
Andrew Tighe, the BBPA’s director of strategy and policy, said the new framework “will level the playing field for all businesses and ensure that those who have not yet passed on all the tips to their staff are required to now”.
He said: “Increasing communication and openness in sharing tips will benefit both existing and new staff. We urge all operators to review the guidelines and ensure that their policies comply with the legislation.”
