Implementation of Tips Bill delayed until October

The Employment (Allocation of Tips) Act 2023, which is designed to ensure hospitality staff receive all money left to them in tips by customers​​ and received Royal Assent back in May last year​​, had originally been expected to come into force on 1 July​​.

However, the Government confirmed in an update yesterday (22 April) that the date had been pushed back three months to 1 October in order to allow businesses more time for implementation.

It comes as the Government publishes its newly finalised code of practise on the fair and transparent distribution of tips, which will have legal effect under the Employment (Allocation of Tips) Act 2023.

As outlined in the code, the act and secondary legislation make it unlawful for businesses to hold back service charges from their employees, ensuring staff receive all of the tips they have earned.

Employers should consult with workers to seek broad agreement in the workplace that the system of allocation of tips is fair, reasonable and clear and must maintain a written policy on how tips are dealt with at their place of business, ensuring this policy is made available to all their workers.

Many elements of the code remain as they were when the draft was published back in December​​, but the updated legislation does provide clarification on certain key points including with regards to agency workers.

The code now states that for the purposes of tip allocation, the 'employer' is regarded as the business that hires the agency worker.

If tips are passed to agencies for payment to workers, the agency retains the obligation to ensure no deductions from tips, meaning agency workers are treated equitably in line with directly employed staff concerning tip distribution.

Additionally, the code now includes hours worked during the period that tips were received as a factor to consider in businesses implementing a ‘fair’ distribution under the legislation.

Strengthened provisions to prevent any form of discrimination in the distribution of tips have been added to ensure fairness for all employees regardless of background or characteristics.

The code also now notes that not all tips are under the scope of the act, and therefore subject to the guidance. For example, if a worker receives and keeps a cash tip, with no employer control or involvement, the tip is out of scope for the legislation.

Digital tipping, whereby a customer uses an app to directly tip members of staff, bypassing the employer altogether, is also out of scope.

An employer may receive the tips directly and then pay workers their share of the tips as part of the next payroll cycle, and a tronc system can be used to distribute tips fairly and transparently.

Should an employee, including agency workers, feel their employer has not acted fairly or transparently with regards to the legislation, then they will have the right to submit a claim to an employment tribunal.

Further non-statutory guidance will be published in due course to accompany the code of practice to help employers and workers interpret the legislation.

A link to the finalised code of practice and consultation responses to the initial draft can be found here​​.