Government reforms (2): Wages - tips for staff

Tags: HR in practice, tips for staff, wages

Categories: Employment Law, Pay & Reward

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We updated you in our previous Newsletters (here) that the Government planned to legislate to ensure that all tips are discretionary and should be paid to staff without deductions.

The Government is now supporting a Private Members Bill to reflect it’s earlier intentions to legislate in this area.

What do we already know?

We updated you in our previous Newsletters (here) that the Government planned to legislate to ensure that all tips are discretionary and should be paid to staff without deductions. The intention was to prevent the practice by some businesses of retaining all or part of discretionary service charges paid by card, instead of passing them on in full to staff.

So what’s new?

The Government is supporting a Private Members Bill (The Employment (Allocation of Tips) Bill) which reflects its previous intention to ensure that all tips, gratuities and service charges are distributed fairly and paid without deductions. The Bill had its third reading on 20 January 2023 and is expected to become law (either later this year or early next year).

The Bill includes:

A requirement for employers to pass on 100% of tips to staff with no deductions, other than those required by tax law.
A statutory Code of Practice on Tipping setting out the principles of fairness and transparency that employers must have regard to.

Requirements for employers to have a written policy on tips, to distribute tips in a way that is fair, transparent and consistent and to keep a record of how tips have been dealt with for three years from the date received.
A right for workers to request information relating to their employer’s tipping record over a specified period during which they had worked for the employer, within the last three years. Employers will have flexibility on how to design and communicate a tipping record, but will need to respond to a request for information within four weeks.
A requirement for tips that are distributed via a tronc to be paid no later than the end of the month following the month in which they were paid by the customer.
A right for agency workers to benefit from the Bill in the same way as workers.

A breach of the rules will enable workers to bring a claim in the Tribunal, which could result in the employer being required to revise the allocation to the worker and/or pay compensation

Government reforms (2): Wages – tips for staff

We updated you in our previous Newsletters (here) that the Government planned to legislate to ensure that all tips are discretionary and should be paid to staff without deductions.

The Government is now supporting a Private Members Bill to reflect it’s earlier intentions to legislate in this area.

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