Starting July 1st, 2024, the Tipping Act will come into effect across England, Scotland, and Wales, introducing significant changes for employees in industries reliant on tipping, notably hospitality, but also extending to beauty, leisure, and hairdressing sectors.
This new legislation is designed to protect workers and ensure that tips are distributed fairly and transparently.
Key Aspects of the Tipping Act 2024
Full Distribution of Tips: Employers are required to pass on all tips and service charges to employees without any deductions, other than for taxes and statutory contributions.
Fair Allocation: All qualifying tips must be distributed fairly among workers, ensuring that those who contribute to the service provided are rewarded accordingly.
Adherence to Code of Practice: Employers must follow specific guidelines set out in the government’s Code of Practice on the fair and transparent distribution of tips. You can review the draft of this code here.
Mandatory Written Policy: There must be a written policy regarding how tips are handled, which should be easily accessible to all employees. We will provide a comprehensive policy to our retained clients once the Code of Practice is finalised.
Record Keeping: Employers must keep detailed records of all tips received and their subsequent distribution for at least three years. These records should be available to workers upon request.
Timely Payment of Tips: Tips must be paid to employees by the end of the month following the month in which they were received from customers.
Consequences of Non-Compliance
Failure to comply with these provisions can lead to serious repercussions. Employers may face claims at Employment Tribunals, with the potential for compensation awards of up to £5,000 per claimant if found guilty of unfair allocation or not adhering to the required policies and record-keeping standards.
The Impact on Your Business
For businesses in the service sector, it is crucial to understand and integrate these new regulations into your operations. The Tipping Act not only seeks to safeguard the rights of employees but also aims to foster a transparent and equitable working environment. This legislation will require some adjustments in how businesses manage and distribute tips, but it ultimately promotes a fairer and more transparent industry standard.
For further guidance on how to prepare for the implementation of the Tipping Act 2024 or to ensure your current practices comply with upcoming changes, do not hesitate to contact us. At enlightenHR, we are committed to helping you navigate these new requirements smoothly and efficiently.
Holly Mapstone is an HR expert and specialises in helping those of you in the SME sector with all of your HR needs.
Consultancy allows Holly to be agile and to adapt her style and support to suit the needs of her clients. Building strong working relationships allows Holly to deliver improvements, while also aligning people strategy to business outcomes and promoting resilient and positive cultures.
Need Advice?
If you need a hand with any of this, or anything else when it comes to the people and practices in your business, we’d love to help. We are always happy to debate the pros/cons, dos/don’ts with you so please do talk to us if we can help in any way, we are here to support you. Just give us a call and arrange a free consultation. You can talk to Alison directly on 07967 221595 or email info@enlightenhr.com