Individuals working in the hospitality sector understand the impact that earning tips can have on their overall income and the frustration caused by having them withheld by their employer. A new law, set to come into force in 2024, will protect over 2 million UK hospitality workers and ensure they receive 100% of their tips.
But what are the new laws on tipping and what does this mean for employers and employees? Tom Moyes, Joint Head of the Employment team at Blacks Solicitors, discusses what this new law means for hospitality workers and how this will affect the industry.
What does this new law mean?
Workers within the hospitality sector are often paid minimum wage, relying upon tips or service charges to make up their income. Whilst cash tips are frequently paid directly to the worker, any card payments are instead paid directly to the employer or business prior to distribution to workers. Certain deductions such as card processing fees can be deducted meaning that workers may often be left short changed.
The Employment (Allocation of Tips) Act 2023 gained Royal Assent in May and officially rendered the withholding of tips from employees as unlawful. The new legislation requires employers to maintain transparent employee tipping records, resulting in an estimated £200 million annually to be reinstated into the pockets of hardworking staff who were previously underpaid (source 1).
The Act also covers the payment method and mandates that tips paid by both card and cash are required to be paid in full to their employees.
What does this mean for staff and hospitality employers?
Following the Act being introduced, any breach of this will entitle a worker to make a claim at the Employment Tribunal for reallocation of the tip and/or compensation.
Hospitality businesses are required to establish a written statutory code of practice for a fair tipping distribution process and retain detailed tipping distribution records for three years from the date of payment. This new law empowers hospitality workers to review tipping records at any time, and employers must provide responses within four weeks. For businesses that use a tronc system, employees must receive their entitled tips no later than the end of the month from when the tip was paid.
For further information and guidance on issues related to modern slavery and employment, please visit www.lawblacks.com/business/employment-law/.
Source 1: www.gov.uk/government/news/millions-to-take-home-more-cash-as-new-law-on-tipping-passes
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