Staff tips, employer obligations

Long-anticipated legislation to ensure workers keep the tips intended for them is finally going through parliament. It’s need to know employer information, particularly for sectors like hospitality, leisure and services, where tipping is especially high profile.

The Employment (Allocation of Tips) Act 2022 will apply in England, Scotland and Wales (not Northern Ireland), with the start date yet to be announced. It inserts new employer obligations into the Employment Rights Act 1996, meaning all tips, gratuities and service charges which an employer receives, or has control over, must be paid to workers in full, without deductions. Workers should receive such payment by the end of the following month. 

New employer responsibilities come in around fair distribution of tips, potentially even where there’s what’s known as an independent tronc system to allocate them. Look out, too, for a new code of practice on what constitutes fair distribution. Most employers will need a written policy on dealing with tips, plus records of tips received and allocated. Workers will have certain rights of access to these records. A process for complaint to the Employment Tribunal is also set out.

In short, it means additional employer compliance, backed up by worst case scenarios of enforcement and awards of compensation at the Tribunal. We should be pleased to provide further help and advice.

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