The Employment (Allocation of Tips) Act 2023 will come into force on 1 October 2024, placing new obligations on employers to ensure that any tips, gratuities and service charges paid by customers are allocated to workers on a “fair and transparent basis”. The changes are expected to benefit more than two million workers across the hospitality, leisure and services sectors. The new rules will apply in England, Wales and Scotland.
Accompanying the legislation will be a new statutory Code of Practice, which provides guidance for employers on what is meant by the fair and transparent allocation of tips. Additional non-statutory guidance has also been promised to support employers. We shall see if this is any good, but bluntly, the legislation needs all the help it can get.
In this guide, we set out our headline answers to the main questions employers may have about these new obligations. We appreciate that many businesses in the hospitality, leisure and services sectors will have already started reviewing and, where necessary, making changes to their current tipping practices, as the legislation itself was published last year. The Q&As in this guide should act as a useful checklist for employers to ensure that any proposed changes to their current practices align with the principles set out in the Code.
