Is the tip for the waiter in the bar/restaurant going into a pot for his/her benefit? What should employers do with tips when they have control over them?

These questions and many more have now been answered in law with Parliament’s recent passing of the Employment (Allocation of Tips) Act 2023 which now amends the Employment Rights Act 1996.

Two million employees across our great hospitality sector are affected by this new legislation and this is now so important given that 80% of bills in bars and restaurants are now paid on debit cards with many establishments moving to cashless systems.

Very briefly the new Act provides the following:

(i) all tips gratuities over which the employer has control must be paid by the end of the following month without deductions

(ii) obligation to ensure fairness of arrangements for distribution among workers either via employer or independent tronc

(iii) a new code of practice from Secretary of State ensuring a fair distribution

There is the inevitable guidance to follow once the Act is brought into force by ministers but this is a landmark piece of legislation with all party support in the House and will ensure fairness for all staff and give confidence to customers that tips will now get to the employees.

If you need advice on the detail I am currently advising many clients on implementation so feel free to call or touch base via the contact address on the site.