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Tighter restrictions on tips are in the pipeline with the incoming Employment (Allocation of Tips) Act 2023

The Employment (Allocation of Tips) Act 2023 has recently received Royal Assent, and whilst the date that the Act becomes law has not yet been confirmed, it is estimated that this will be in around one year's time.

This leaves time for businesses in the relevant industries to review and understand this legislation, and to put appropriate policies in place. This legislation will have a direct impact on businesses in the leisure, food and drink, and entertainment industries to name a few.

The headline points from the legislation are that:

  • An employer must ensure that the total amount of the qualifying tips, gratuities and service charges is allocated ‘fairly’ between workers (not just employees) at that place of business;
  • This must be done within one month of the customer paying the tip, gratuity, or service charge;
  • Employers in the relevant industries will be required to have a written policy setting out how they deal with tips;
  • They will also be required to keep a record of the movement of any tips throughout the business over the last 3 years; and
  • Employees will be able to bring a claim in the employment tribunal where their employer has failed to deal with tips properly and within the time limits. Compensation up to a maximum of £5,000 may be ordered by the tribunal and awarded to the Claimant!

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The measures in the Act will be supported by a statutory Code of Practice. This Code is being developed and will be subject to formal consultation later this year.

Whilst a year seems like plenty of time to get to grips with this legislation, it is advisable to seek guidance on what is required under the legislation and to have an appropriate policy in place well in advance of the commencement date to minimise the risk of any employment tribunal claims.

Our Employment team have extensive experience in dealing with the preparation of workplace policies and will be pleased to assist you and your team with any concerns or question you may have about the preparation of a relevant policy. For more information, please contact one of our team of expert Employment Lawyers.

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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