Effective 1 October 2024

The Employment (Allocation of Tips) Act aims to ensure that workers receive all tips, gratuities, and service charges paid to their employer or that are under the employer’s control, without deductions. The Act mandates fair distribution among workers and provides rights for employees to request details about their employer’s tipping policies.

The statutory Code of Practice, will guide businesses on fair tip distribution. If employers fail to comply, employment tribunals can impose financial remedies, including payments to affected workers.
The Code does not set out an exhaustive list of factors for employers to consider. Instead, it provides overarching principles on what fairness is for the purposes of the law, the areas in which employers need to make decisions to comply with their duties, and how they should apply these principles in their specific places of business. It will be for each individual employer to determine which specific principles best apply to its business.

Under these principles, employers should consider what is fair distribution, taking into consideration how this will apply where there is a mixture of permanent staff, directly recruited staff, agency workers and zero-hours contract workers in the same location. They must also avoid any form of unlawful discrimination when selecting and applying the factors for allocating and distributing tips.
Employee consultation should take place in order to reach agreement in the workplace on the system of allocation of tips and whether it is fair, reasonable and clear, and the factors considered by employers must be stated in the tipping policy shared with workers. In order to ensure fairness, workers should understand how tips are allocated. This agreement should be kept under regular review and updated following any significant changes in the business.

A tipping record which includes details of all qualifying tips received by the employer at the place of business, and the amount allocated to each worker, must be kept for three years. A worker has the right to make one written request per three-month period to view the tipping record of their employer for a period dating back up to three years. Fair processes should be in place for resolving issues and responding to queries from workers who have not received the share of tips they expected to.

Additionally, employers will be required to provide written policies detailing how tips are managed if tipping is a regular practice within their business.