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On 2 May 2023 the Employment (Allocation of Tips) Act 2023 received Royal Assent, which is the final step required for a parliamentary bill to become law. The measures are expected to come into force in 2024, following a consultation and secondary legislation.

What does the legislation hope to achieve?

The aim of the legislation is to compel employers to ensure all tips and service charges are allocated fairly between its workers. The government has stated its belief that millions of UK workers will take home an estimated £200 million more of their hard-earned cash.

What must employers do?

Employers must also create their own written policy on allocation of tips at their place of business which must set out how the employer ensures that all tips and service charges are fairly allocated. ‘Fairly’ is not defined, but employers are required to have regard to a Code of Practice, which once published, will hopefully provide more guidance.

Employers are also required to keep written records of all tips and service charges allocated to workers in the previous three years. A worker can request that information by making a written request to the employer.

What can you do if you believe your tips are being witheld?

If a worker believes that tips have been withheld from them, they can make a claim in the employment tribunals. Most claims in the employment tribunals need to be made within 3 months of the alleged act (subject to any extension due to the Acas Early Conciliation process), but interestingly under the Employment (Allocation of Tips) Act 2023, there is a 12-month limitation period. A tribunal will be able to not only award the amount of the withheld tips, but also compensation of up to £5,000 per claiming employee to reflect additional financial losses caused by non-payment. Tribunals will also have the power to compel employers to revise their tip allocation policies.

Another interesting point in the legislation is that tribunals will be able to order employers to pay tips not only to the person who brought the claim, but also to other workers employed by the employer.

Who will benefit?

The government has estimated that the change will benefit more than 2 million UK workers across the hospitality, leisure and services sectors. Employers in those sectors should start considering how they will manage the impact of the legislation once it comes into effect next year and should take appropriate legal advice to ensure their policies and procedures comply with the legislation and the incoming Code of Practice.

Contact our employment law solicitors to ensure your business is protected 

If you or your business require advice relating to the latest changes to employment law including the introduction of the Employment (Allocation of Tips) Act 2023, our employment lawyers will be happy to assist you. Please contact our solicitors today by completing the enquiry form below.

Key Contact

Debbie Coyne

Debbie Coyne

Employment Law Senior Associate Solicitor

Debbie is a Senior Associate in the Employment team who regularly attends our offices in Altrincham, Warrington and Chester.  She is recommended in The Legal 500 and has been named as a Rising Star.

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