New Legislation due July 2024 regarding allocation of tips in the Hospitality sector banner


New Legislation due July 2024 regarding allocation of tips in the Hospitality sector

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In July 2024, new legislation is due to come into effect which will make it illegal for employers to withhold tips from its workers or make any deductions from tips before passing them on to workers.

This will namely affect employers and workers in the hospitality industry and the Government has estimated that this will allow workers across the UK to keep a total of £200 million worth of tips each year. The legislation applies to all tips, gratuities and service charges and ensures that tips consumers leave in recognition of good faith and hard work are going to the workers as intended, according to the Draft Code of Practice issued by the Government.

Legislation is already in place protecting cash tips, however this new legislation is arguably more relevant in modern society, covering tips left via card payment. Employers must ensure that all tips received are distributed in a fair and transparent manner, having regard to the Government’s Code of Practice when doing so. These changes are due to come into effect across the UK on 1 July 2024 under the Employment (Allocation of Tips) Act 2023.

Under the new legislation, employers must maintain a written policy (which is made available to all workers) setting out how they intend to deal with tips and to keep records of tips received and how they are allocated amongst the workers. The latter is likely to provide valuable evidence in the event that a worker brings a claim for breach of the new legislation. In addition, workers will be entitled to request information from their employers regarding tip allocation, which would likely assist them in bringing such claims.

If you are an employer in the hospitality sector and require assistance or advice prior to this new legislation coming into force, please get in touch.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.
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