Is your business ready for the new law regarding payment of tips to staff?
On 1 July 2024, the Employment (Allocation of Tips) Act 2023 comes into force, requiring businesses to allocate and distribute all qualifying tips, gratuities, and service charges to their workers in a fair and transparent way.
Overview of new law around paying tips
On 1 July 2024, the Employment (Allocation of Tips) Act 2023 comes into force.
This law requires businesses to allocate and distribute all qualifying tips, gratuities, and service charges to their workers in a fair and transparent way. It applies to any business that receives a qualifying tip from a customer, so whilst it will particularly affect businesses in the hospitality industry (hotels, restaurants, coffee shops, and bars) it will also impact hairdressers, taxi companies, and other such businesses that regularly receive tips.
The law also sets out that tips must be distributed by the end of the month after the month in which the tip was paid, and that you have to keep a record of how every tip has been dealt with.
This new legislation is complex, and also given it will not impact the majority of businesses who do not regularly receive tips, we are not going to set out chapter and verse in this article. Instead, we have prepared a detailed briefing note, and if you would like to receive a free copy of our briefing note please contact our Employment team by emailing Eleanor Disney via edisney@leathesprior.co.uk and we will send this to you.
If your business receives tips on more than an occasional or exceptional basis, the new law provides that you must have a written policy detailing how you will deal with tips. Leathes Prior has already begun assisting businesses with drafting their own bespoke tipping policy and advising on the necessary legal issues arising. If your business would like to instruct us to prepare a policy for you, or you would like a quotation for such, please also contact us as set out above.
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