Today (Monday 22 April), the Government introduced the code of practice on the fair and transparent distribution of tips that will have legal effect under the Employment (Allocation of Tips) Act 2023.
The updated code will be statutory and have a legal impact, which means it can be introduced as evidence in an employment tribunal.
This means it will be unlawful for employers to hold back service charges from employees, aiming to ensure staff receive all tips earned.
The measures are expected to come into force from 1 October, after parliamentary approval has been secured.
Business and trade minister Kevin Hollinrake said: “It is not right for employees to withhold tips from their hard-working employees.
“Whether you are cutting hair or pulling a pint, this Government’s legislation, which will protect the tips of workers and give consumers confidence when they leave a tip, it goes to the hardworking members of staff.
“The secondary legislation laid today reinforces our commitment to legally protecting our low-paid workers and ensuring a fair day’s pay for a fair day’s work.”
Important code
All businesses are encouraged to follow the new requirements immediately, before they come into legal effect, the Government said.
Tipjar CEO Ben Thomas added: “Hospitality and service industries are part of the fabric of our culture and a cornerstone of our economy.
“We are honoured to have consulted with the Department of Business and Trade as it has developed this important code of practice clarifying employers’ responsibilities as they pass tips to their hard-working teams.
“As a business that exists to help employers distribute tips on the same principles of fairness and transparency, we are confident this act will support millions of tipped workers across the UK and level the playing field for businesses across these sectors.
“We’re excited to support employers in leveraging the opportunities this will present as we build a more fair and transparent future.”
Trade body UKHospitality said the postponement of the legislation will give businesses time to implement the required changes.
Chief executive Kate Nicholls added: “Hospitality is a people business and it’s so important we reward our staff through a fair and transparent tipping system.
“We’ve been pleased to support this legislation through it’s journey and it is good to see the Government has worked with UKHospitality to deliver guidance and a code of practice that can work for business.
“With the variety of businesses in hospitality, anything too prescriptive would not have been practical.
Sticking point
She described the delay as an appropriate step and called for the Government to work with the trade body before the legislation comes into play later in the year.
Nicholls said: “The revised timeframe will now allow businesses to implement any changes required and is evidence of [the] Government acting on feedback from UKHospitality.
“It is disappointing however, the Government has not provided greater clarification of agency workers and the payment of tips, which is a particular sticking point for businesses.
“Given the desire from all parties involved to get this legislation right, we would urge the Government to work with UKHospitality on providing greater clarity on this issue before the legislation comes into force in the autumn.”
Furthermore, the British Beer & Pub Association also welcomed the announcement.
Chief executive Emma McClarkin said: "Having responded to the consultation on the code of practice and aired our concerns, we are glad to see elements of the code clarified in the final version.
"Allocating tips to staff in a fair and and open way is an important strand in ensuring employers are treating their staff in a proper and supportive manner.
"From our members, the move to better transparency, staff engagement and record-keeping largely already reflects current practices, but having a level playing field in the form of the act and the code across all businesses will provide further reassurance for employees.
"Equally, an extension in the implementation deadline to 1 October allows businesses additional time to ensure their policies and processes are reviewed and updated where necessary.
"We look forward to working further with the DBT team to develop industry-specific guidance over the coming months to ensure the requirements can be implemented in a practicable manner, reflecting the nature of hospitality businesses."
