Tips on Tipping for Employers!

The Act requires all employers to manage their staff tips, gratuities and service charges in accordance with fair and consistent criteria.

Employers are required to distribute any tips that the business receives fairly amongst its workers and employees without deduction.

Workers will have the right to request more information in relation to the business’ tipping records once every three months. This new right could give rise to workers/employees bringing Employment Tribunal claims and using this information as evidence within the process.

Employers are required to distribute any tips that the business receives fairly amongst its workers and employees without deduction.

Workers will have the right to request more information in relation to the business’ tipping records once every three months. This new right could give rise to workers/employees bringing Employment Tribunal claims and using this information as evidence within the process.

The Government’s code of practice gives guidance on this development. This will also come into force on 1 October 2024 Distributing tips fairly: statutory code of practice. There is likely to be further guidance issued.

Some of the key provisions in relation to tipping practices are:

1. Written tips/gratuities/service charge policy – businesses must have a written tips policy which sets out key information about the allocation and distribution of tips/gratuities/service charges. This policy must be available to all customers, so it is really important that staff are aware of it and trained on it.
2. Transparency – employers must inform each individual worker of their entitlements – we suggest that businesses update their induction process to include training on the tips/gratuities/service charge policy. It is important that all employees/workers can accurately tell customers what will happen to tips.
3. Payments – must be in full and no later than the end of the month following the month in which the customer paid the tip. E.g., qualifying tip paid on 5 June, must be distributed by 31 July.
4. Tipping Records – must include details of all qualifying tips received by the employer and the amount allocated to each worker. This should be maintained for 3 years.
5. Process – ensure employers have a fair process in place for resolving issues and responding to queries from workers/employees. This process must be set out in the tipping policy, and employees/workers must be educated on this process.

How can Ellis Jones help?

Written Policy – we can help you update and put in place any staff policies to make sure they are up to date and legally compliant. We are happy to offer a free health check of your employment contracts and staff policies, following which we can recommend any necessary update. We also run a monthly and free HR forum for anyone with responsibility for HR. If you are interested in attending the online forum, or a free health check of documents, please get in touch: kate.brooks@ellisjones.co.uk or 01202 057754.