For many employers in the hospitality industry, a sector perhaps hit harder than most over the last few years with the impact of Covid followed by the energy and cost of living crisis,  the last thing they wanted to hear this week was that the new regime on the allocation of staff tips is to come in to force.

This week, the Employment (Allocation of Tips) Act 2023 came into force, though the good news for employers is that whilst certain 'enabling' aspects of the Act are now live  (largely to allow the Secretary of State to issue a code of practice),  the substantive provisions of the Act are not expected to be brought into force before May 2024 (although the government will confirm the precise date later in 2023).

 

The Act will require employers to fairly allocate tips over which they exercise control or significant influence (qualifying tips)  - such as those service charges which are so regularly added to the patrons' bill these days or any tips paid by credit/debit card  -  and pay them to workers in full within a month of payment by the customer. Where tips are paid on more than an occasional and exceptional basis (such as a cash payment made by a customer to a particular employee), an employer must have a written policy, available to all workers, setting out how qualifying tips are dealt with.   An employer's tipping record will be available to view, assisting prospective employees with their choice of employer in the sector.  

 

The Government believe that the Act will see an extra £200 million a year go back into the pockets of staff, suggesting that currently many employers do not pass on in full (or at all) the tips and service charges that are being received from customers.  

Some affected employers are expressing concerns that the administrative burdens placed upon them will be another hammer blow to their industry -  and employment lawyers are expecting to see a lot of Tribunal claims, not least because claims relating to the allocation of tips will be able to be brought up to 12 months after the alleged failure to comply (unlike the usual 3 month limitation on Tribunal claims).