New tipping laws come into force
With effect from Tuesday 1st October 2024 any business that receives tips, gratuities or service charges must pass on all tips and service charges without deductions (save for PAYE deductions) to workers, including agency workers, regardless of whether payments are made in cash or by card.
Previously, cash tips would belong to staff but employers were free to choose whether pass on tips made via card payment. Any tips paid must be distributed to staff by the end of the month following the month in which the tips are paid by customers.
This legislation is estimated to provide a ÂŁ200m boost to 3 million service workers in England, Scotland and Wales and comes into force alongside a new statutory code of practice on distributing tips fairly. Those industries most likely to benefit from the new tipping law include restaurants, cafes, hairdressers and even taxi drivers.
Employers are further required to ensure that such tips are distributed in a fair and transparent manner, exercising control over how they are distributed, and have in place written policies setting out how tips are to be distributed which complies with the new code of practice. Workers also have a right to request access to records held of all tips paid to them by their employer.
Records dating back three years detailing all tips paid are also a further requirement.
If employers do not comply with this new law they risk claims being brought against them in the Employment Tribunal.
In addition to the above, employers should consider the following:-
â—Ź regular reviews of tipping practices to ensure they remain fair in line with staff turnover and any other wider organisational changes;
â—Ź consult with workers to try to get broad agreement that any proposed system of allocation of tips is fair, reasonable and clear; and
â—Ź have a written policy which is in plain language, avoids legalese and is accessible to all, including those with disabilities.
If you are an employer or employee affected by this new legislation and want advice or support in connection with the same, or any employment law or HR issues more generally, please do not hesitate to get in contact with us.
Our Employment Law team is headed up by Lloyd Clarke, a Partner of the firm, who oversees a team of lawyers and paralegals who would be happy to assist. Please call: 01206 766333 or contact Lloyd on lloyd.clarke@attwells.com
Our blogs and articles are correct at the time of writing.
These have been created for marketing purposes only and should not be considered as legal advice.
