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Employment (Allocation of Tips) Act 2023

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The Employment (Allocation of Tips) Act 2023 received Royal Assent last week. The commencement date has not been announced but, according to the government release, will be in about one year’s time.

In brief, it requires employers to ensure all tips and service charges are allocated fairly between its workers (note: workers, not employees). ‘Fairly’ is not defined, but employers are required to have regard to a Code of Practice. The Code of Practice is being developed and will be put out for consultation in due course.

It also compels employers to have a written policy on how it deals with tips. I’ll produce one for members of once the Code of Practice has been published. This is an interesting development, as I don’t think there has previously been an express statutory requirement for employers to have a formal policy on something (please don’t email me back saying there is a requirement for a disciplinary or grievance policy. Section 3 of the ERA does not require that, although many think it does).

Employers must keep records of all tips and service charges received for three years. Of course, just yesterday the government announced how it was abolishing red tape by removing record keeping requirements for working time. What the government giveth with one hand…

The enforcement provisions are interesting. First, there is a 12 (not 3) month limitation period. Second, tribunals can compel employers to revise their tip allocation policies. Third, tribunals can order the employer to pay tips and services charges not just to the Claimant, but to any workers employed by the employer. Fourth, compensation of up to £5,000 per Claimant might be payable to reflect additional financial losses caused by non-payment.

[Thanks to Quentin Colborn for tipping (ahem!) me off about this]