The Employment (Allocation of Tips) Bill received Royal Assent on 2 May 2023, becoming the Employment (Allocation of Tips) Act 2023. The government estimates that it will help UK workers, predominantly in the hospitality sector, to receive £200 million in tips that would otherwise have been deducted by their employers. The Act is expected to be brought into force in May 2024 although the government will confirm the date later in the year.

  

The Act will create new legal obligations for employers, who will be required to fairly allocate tips over which they exercise control or significant influence (qualifying tips), and pay them to workers in full within a month of the payment made by the customer. Where tips are paid on more than an occasional and exceptional basis, the employer will also be required to have a written policy, available to all workers, that sets out how qualifying tips are dealt with. The government intends to issue a statutory Code of Practice on the fair and transparent distribution of qualifying tips which employers must give regard to. Failure to comply with any code will be admissible in evidence in employment tribunal claims. The Department for Business and Trade will issue a formal consultation on the Code of Practice later this year.

 

Another new duty for employers is maintaining a record of qualifying tips and their allocation, which must be kept for three years. Workers will have the right to request information about an employer's tipping record, which should better enable them to challenge these practices through employment tribunal claims. Workers will be allowed to complain to an employment tribunal within 12 months of a failure to comply with the new obligations.