A new law will ensure that British workers receive 100% of the tips, gratuities and service charges left to them by customers via cash or card.

The Employment (Allocation of Tips) Bill will create a legal obligation on employers to allocate 100% of tips to their employees without making any deductions and will require tips to be distributed at the premises they are earned.

Employers will need to have a written tips policy, make this available to workers and keep records for 3 years. Workers can request to see parts of these records and raise a separate tribunal claim if records aren’t kept, or their employer doesn’t allow them to see them.

However, this new legislation will only apply where the employer controls or influences the allocation of tips; employers who have no influence into how tips are passed on to workers won’t be directly bound by the new law – but it is still beneficial for them to set some form of framework as to how staff will receive tips.

Once the bill is passed into law, a new Statutory Code of Practice will be released to supplement the legislation, providing information to help businesses better understand how to set a framework and ensure fairness and transparency.

In January 2023 the bill was passed by the House of Commons and it has now moved onto the House of Lords for further consideration. The bill is likely to come into force this year and we will be sure to provide further updates on its progress.

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