Allocation of Tips rule change delayed until October 2024
By The Department for Business and Trade published the final version of the Code of Practice for Fair & Transparent Distribution of Tips which will accompany the statutory requirements set out in the Employment (Allocation of Tips) Act 2023.
The main headline – the implementation of the new rules has been delayed until 1st October 2024 allowing businesses a few more months to plan and prepare. Otherwise, little has changed between the draft Code of Practice and the final version, despite a consultation, in which Operators and professional bodies voiced many concerns around specific aspects of the act, such as the inclusion of Agency workers and the ‘Timely Distribution’ rules.
That being said, the final version does try to give a little more clarity and reassurance around some aspects of the draft documentation.
Digital Tipping
Due to the increased use of apps, such as TipJar, since the original legislation was created, the Code of practice makes reference to this tipping practice by stating ‘Digital Tipping, whereby a customer uses an app to directly tip members of staff, bypassing the employer, is also out of scope (of the Tipping Act)’.
Non-Monetary Tips
Non-Monetary tips can also be in scope of the legislation if they are received or controlled or significantly influenced by the employer. Examples of non-monetary tips include a voucher, token, casino chip or similar item that can be exchanged for money or goods.
Timely Pay Out
Although, during the consultation, several employers confirmed they favoured keeping tips back from busy periods to share out during quieter months, the legislation has not changed, and Employers must ensure the tips are paid out by the end of the month after they were left. The justification for this is that the practice does not align with the principle that tips should be paid promptly to workers nor the principle that tips are given freely by customers and the amount left cannot be assumed or guaranteed.
Agency Workers
Not much has changed in relation to the inclusion of Agency workers, but a new statement has been added to the code which confirms that where a business passes tips over to an agency the agency is responsible for passing the money onto their workers without unauthorised deductions.
Fairness – Factors to Consider
Hours worked has been added to the list of factors that could be considered in relation to fairness. Although not an exhausted list, the code suggests the following:
- Type of role/worker e.g. distribution between front of house and backroom workers
- Basic pay (and how workers are engaged)
- Hours worked during the period when tips were received
- Individual and/or team performance
- Seniority/level of responsibility
- Length of time served with the employer
- Customer intention
Transparency
Employers will not be said to have met their obligations regarding fairness and transparency if employees are not aware of their entitlement in line with the tipping policy. Employers are free to distribute the policy as they want to, but they must ensure that it is clear, accessible and available to all workers – including agency workers.
What it means for Fourth
As the leading HR & Payroll solution provider to the UK hospitality industry, my team has been working hard to ensure the Fourth platform is ready to support our customers once the new rules come into play. Thankfully nothing announced today materially changes our readiness. However, we will spend the next few days fully absorbing the information and ensuring we are good to go – at least we have a couple more months to get ready!
For further reading, we recently published a report detailing all the UK HR & Payroll legislation updates impacting the hospitality industry. I encourage you to download it and ensure your business is prepared!
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Disclaimer: This resource is not a substitute for legal advice. This material is for informational purposes only, Fourth recommends seeking legal advice to ensure compliance with incoming legislation.