Landmark legislation for hospitality workers with Tipping Bill

As of 1 July 2024, the Tipping Bill becomes law in a landmark move for hospitality workers across the UK. The Employment (Allocation of Tips) Act 2023 has achieved Royal Assent marking a new era prohibiting employers from withholding staff tips.

The move is expected to benefit over 2 million workers and result in an estimated £200 million annually going back to employees. While this is great news for over 2 million workers, this legislation also has practical implications for business owners within the industry.

What do business owners in the hospitality industry need to consider?

The Act is expected to come into force in 2024 following a consultation period and the development of secondary legislation. Businesses will need to make a few key considerations before July when the Bill commences.

Distributing Tips

A new code of practice has been drafted for the Tipping Bill to provide guidance on how to distribute the tips. This may involve needing to update existing accounting systems and practices to align with the new requirements.

Employers will need to have a written policy stating how tips will be taken and distributed among staff. They must also ensure that funds are being handled fairly so it would be wise to consult with staff on the way they’d like to see tips distributed.

The Bill applies to all contract types from permanent staff to agency and zero-hours team members. While tips do not need to be distributed equally, they should be shared equitably based on a pre-determined criteria.

Reporting and Accounting

Accurately reporting and accounting for all tips and service charges will need to be carried out.

With this new law making it unlawful to withhold these funds, businesses must maintain transparent financial records at all times.

As part of the Act, businesses will be required to keep written record of tips received and how they are distributed for three years beginning from the date it was paid. Employers should also be aware that employees now have the right to request information about their employer’s tipping records.

Further developments

It is now paramount going forward that business owners and their accountants working within hospitality continue to look out for developments in the industry. Currently, there is a consultation period and the development of secondary legislation. This could mean further adjustments or additions to the Act.

Staying on top of these changes will ensure that businesses are always operating within the law and that their staff are aware of their rights.

What next?

At Westcotts, we can provide valuable support to businesses in navigating these changes. This may include advising on best practices for tip distribution, reviewing systems required, compiling employer’s tipping records or conducting internal audits to ensure compliance.

Reach out to our Hospitality and Leisure team today or find the contact details for your local Westcotts branch.