Tipping legislation: draft guidance published and in consultation

The Employment (Allocation of Tips) Act 2023, described as the biggest legislation shake-up for the hospitality industry in recent history, will now come into force later than expected on 1 July 2024, making it illegal for employers to withhold tips from staff.

The draft code of practice was published on 15 December 2023 to help employers and workers understand this legislation.  It aims to give hospitality employers and workers and other sectors that use tipping practices more detail on fair and transparent allocation of “qualifying tips”. 

The main points to consider are:

• This will apply to all workers, including permanent employees, agency staff, casual workers and those on zero hours contract.
• The method of allocation and distribution (including troncs).
• Allocating and distributing tips fairly does not necessarily require employers to allocate the same proportion of tips to all workers if there are legitimate reasons to allocate different proportions of tips.
• There should be a clear and objective mechanism for distribution which should be fair and reasonable given the circumstances and nature of the employer and non-discriminatory; the factors which may be considered are:
  • Type of role (e.g front of house, back room)
  • Basic pay
  • Individual and/or team performance
  • Seniority/level of responsibility
  • Length of service
  • Customer intention 
• The transparency measures, including the requirement to keep a written tipping policy, for this to be available to all staff and to maintain accurate tipping records for a period of 3 years.
• Employers should consult with their staff and seek broad agreement about the way tips are distributed and review this regularly.

A consultation process has started and is an opportunity for all interested parties to provide their views.  https://www.gov.uk/government/consultations/distributing-tips-fairly-draft-statutory-code-of-practice/consultation-document-code-of-practice-on-fair-and-transparent-distribution-of-tips-html-version

The consultation will remain open for ten weeks, closing on 24 February 2024. Following this, submissions will be reviewed before the government publishes a response and final version of the Code in spring 2024.

We will be holding a webinar on the implications and providing practical advice on the draft Code in 2024. Contact us for more information.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at December 2023. Specific advice should be sought for specific cases. For more information see our terms & conditions.