Employment (Allocation of Tips) Act 2024

When does it take effect?

This Act is expected to come into force from May 2024.

What do we need to know?

• Employers must ensure that 100% of all customer tips, including those paid by credit card, are distributed to staff without any deductions. In particular, it will be unlawful to deduct bank or administrative charges from tips.
• Payment of tips must be made in full to staff no later than the end of the month in which the tip was paid by the customer.
• This law applies to all employees and workers including agency staff and zero-hours workers.
• Employers will be required to have a written policy on distribution of tips to staff. A statutory Code of Practice will be published before the end of 2023.

What do we need to do to prepare?

• Businesses in affected sectors must be ready to hit the ground running when this change comes into force.
• Look at existing payroll systems and practices on tips and work out what, if anything, needs to change.
• Consider voluntary compliance at this stage. This is now commonplace and helps to attract staff in a competitive labour market.
• Prepare your written policy on tips once the Code of Practice is published.

Explore more updates in this issue of Employment Matters below.

Find out more about our Employment & Immigration team, and how they can support you here.