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 were answered last year in the Employment (Allocation of Tips) Act 2023 which amended 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 2023 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

It also ensures that employers have a written policy on the distribution of tips.

Along comes the new Bill and directs employers to consult with representatives of an independent trade union recognised by the employer in respect of workers who are likely to be affected by the policy, or representatives appointed or elected by those workers and having authority to receive information and to be consulted about the policy on behalf of those workers.

It appears that guidance issued by central government was not enough for this new government and now employers must involve the trades unions in crafting and commenting on their policies. There will also be a duty to make known to the employees any comments contained in the consultation on the policy.

I am getting a lot of calls from clients on many aspects of the new Bill affecting our sector so do let me know if you need any more detailed guidance.