LSA Welcomes New Tipping Legislation

LSA welcomes the coming into force of the Employment (Allocation of Tips) Act 2023 (‘The Act’)  from the 1^st of October 2024. This new legislation is important as it promotes fairness for workers in the hospitality industry “by ensuring that the tips consumers leave in recognition of good service and hard work are going to the workers as intended…” (Overview of the Act).

The Act, which applies to England, Scotland & Wales requires employers to distribute all tips, gratuities and service charges (regardless of whether they were made by cash or by card) to workers in a fair manner and without any deductions (s.2). It is important to note that agency workers are also included within the scope of the Act and employers must take them into account when distributing tips. The Act further provides that employers must distribute all tips no later than the end of the following month from the month they were made (s.4).

The Act only applies to tips which have some element of employer control or involvement over them e.g. it would not apply where a worker is tipped in cash and keeps it, or if a worker is tipped direct via a tipping app without any employer involvement.

In recent years, it has become increasingly easier for businesses/employers to unfairly retain tips as the majority of all tipping is done by card. The Department for Business and Trade predicts that the result of this new legislation will mean £200 million in the pockets of much deserving workers rather than their employers.

Under the new legislation, employers will now need to have a written policy detailing how tips are dealt with and allocated between workers. This will need to be made available to all workers. Workers may also request to see an employer’s tipping record and details of how much of that has been allocated to that particular worker (s.6).

The Act also provides workers with recourse to the Employment Tribunal in the event of employers failing to comply with the new legislation. Failure to allocate tips fairly/within a timely manner or failing to provide a copy of the tipping policy/tipping record can result in the Tribunal ordering the employer to reallocate tips and/or compensation of up to £5000.00 to the worker (this may also be extended to other workers should the Employment Tribunal decide to do so (s.7 and s.8).

The Act requires employers to have regard to a statutory Code of Practice when designing and implementing their tipping policies and practices.

The government has also published non-statutory guidance which provides further guidance to employers and workers on how to interpret the Act.

There will inevitably be some employers who will disregard the new tipping laws but LSA are hopeful that the principles of fairness and transparency intended by the Act will be achieved in practice for the majority of workers. The success of this new legislation lies in raising awareness with workers and ensuring they are equipped with the necessary information about their new rights and how to enforce them.

Nazia Ahmed
Dual-qualified solicitor (non-practising) & LSA volunteer