Tipping and The Law

A new law has been introduced - the Employment (Allocation of Tips) Act. According to this act, all employees in any industry where tipping is customary are entitled to 100% of the tips, service charges or gratuity earned, rather than withholding them for any reason or using them to supplement business costs. This also applies to agency workers and those on zero-hour contracts! 

Employers must distribute tips equally and fairly, and a written policy of how the tips are distributed that is easily accessed by members of staff must be kept. Employers must also record how much gratuity the business earns, which should also be accessible to members of staff, for the sake of transparency. The employer still has a choice on who the tips are distributed to, though; for example, they may choose to exclude salaried employees or those who do not interact with customers.

As this is a legal act, all employers must comply with the new legislation. If you are found to be in breach of these new regulations, affected employees have the right to escalate the matter to a tribunal claim, where they could potentially be awarded £5000 in compensation. As such, it is vital that you understand what is required of you and your policies.

If you’re still unsure about how to navigate these new changes, or maybe you’d just like someone to check that your business is fully compliant, get in touch with us today. We frequently perform full health checks for our clients, inspecting every aspect of the business from legal compliance to current HR practices.