New Tipping Laws – If You Work In Hospitality, You Need To Know This…

The Tipping Bill has recently received Royal Assent, making the withholding of tips from staff unlawful.

The Government predicts that the new legislation is set to benefit more than 2 million workers across the hospitality, leisure and services sectors in the UK.

Currently, when a customer provides a cash tip, it generally belongs to the worker (although it is possible for employers to retain all or part of the tip under their terms of employment)

• When a customer provides a tip by a card payment, that payment is directly paid to (and thereby frequently) retained by the employer.
• The new legislation aims to overcome this and any other unethical tipping practices by requiring employers to ensure all tips and service charges are distributed fairly amongst its workers.

The legislation is expected to come into force in 2024. It will include a requirement for employers to:

• pass the entirety of any tips and service charges received to its staff without any deductions;
• have a written policy on how it deals with tips;
• keep records of all tips and service charges received for 3 years, and;
• have regard to a statutory Code of Practice, which will be developed and in force in due course.

Non-compliance will enable workers to bring a claim in the Employment Tribunal, which could result in the employer being required to revise their tip allocation policies, pay compensation of up to £5,000 per Claimant and/or pay tips and services charges not just to the Claimant, but to any workers employed by the employer.

Whilst the commencement of the new legislation is awaited, it is prudent for employers to start reviewing their policies and practices on tipping now to ensure they are compliant as of when the new law comes into force.

Should you require further guidance, please reach out to our Employment Team.