The Tipping Bill: An Update

The Tipping Bill : An Update on the New Law Protecting Workers’ Tips

The Tipping Bill, a significant piece of legislation aimed at protecting workers’ tips, has received Royal Assent on 2 May. This law is set to bring about a major overhaul in the tipping practices across the UK, benefiting more than 2 million workers in the hospitality, leisure, and services sectors.

Key Updates

Here are the key updates that businesses and employees need to be aware of:

• Implementation Date: Contrary to previous reports, the measures are expected to come into force on 1st October 2024, not in July.

• Code of Practice: The government has introduced the Code of Practice on the fair and transparent distribution of tips. This updated Code of Practice will be statutory and have legal effect, meaning it can be introduced as evidence in an employment tribunal.

• Transparency: Workers will be able to view an employer’s tipping policy, their tipping records and will be able to use the Code as evidence in an employment tribunal.

• Financial Impact: An estimated £200 million a year will go back into the pockets of hard-working staff by retaining tips that would have otherwise been deducted.

• Legal Obligations: The new law makes it unlawful for businesses to hold back service charges from their employees, ensuring staff receive all of the tips they have earned.

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What This Means for Businesses

You will need to ensure they have a fair and transparent process in place to distribute tips honestly amongst employees. There are four key principles you should follow in your tipping practices, as per the GOV.UK code of practice:

1. You should have a written policy that is easily accessible and on public display at work.

2. You should have a process for dealing with customer requests about how you manage tips and service charges.

3. You should make sure that staff understand your policy and can explain it to customers or know where to direct them for more information.

4. You should provide employees with a full breakdown of how you distribute service charges, tips, gratuities, and cover charges, as well as any deductions you make and why.

Once this law comes into effect, you must ensure you allocate staff tips fairly, keep accurate records of any tips given, and have resolutions in place for dealing with concerns from staff, should they question their share of the tip.

Stay Informed and Prepared

It’s crucial to stay informed and ensure your business is compliant. If you have any questions or need guidance on adapting to these changes, seeking expert advice and support is recommended.

Our Payroll teams at Haines Watts are here to help. By outsourcing your payroll services to us you can expect to receive expert advice and support.   We’re committed to helping you navigate this transition smoothly and maintain fair practices for all your employees.

Contact your local Haines Watts office today.